Market Newsdesk

August 4, 2021 4:20 pm

Albemarle Reports Second-Quarter Results

PR Newswire

CHARLOTTE, N.C., Aug. 4, 2021 /PRNewswire/ — Albemarle Corporation (NYSE: ALB) today announced its results for the second quarter ended June 30, 2021.

Second Quarter 2021 Highlights

(Unless otherwise stated, all percent changes are based on year-over-year comparisons)

Net income of $424.6 million, or $3.62 per diluted share, including a gain on the sale of Fine Chemistry Services (FCS) business
Adjusted diluted EPS of $0.89, an increase of 4%
Net sales of $773.9 million, an increase of 1%; Net sales increased 5% excluding FCS
Adjusted EBITDA of $194.6 million, an increase of 5%; Adjusted EBITDA increased 13% excluding FCS
Full year 2021 outlook revised to reflect better than expected Lithium performance, lower interest expense and tax rates, offset by higher Bromine raw material costs and supply chain disruptions; guidance updated to reflect sale of FCS
Completed the sale of FCS on June 1, 2021, in a cash and stock transaction valued at ~$570 million
La Negra III/IV commissioning stage in process, commercial production expected to begin in first half of 2022

“Albemarle delivered another strong quarter, generating $195 million in adjusted EBITDA, driven by continued strength in demand for our Lithium and Bromine products,” said Albemarle CEO Kent Masters. “We are focused on executing our accelerated growth strategy. We are in the final stages of two lithium projects which are expected to double our nameplate capacity to about 175,000 metric tons, including La Negra III/IV where construction is complete and commissioning is progressing. We are firmly focused on advancing all our lithium projects to meet customer demand and accelerate profitable growth.”

Outlook

The company continues to expect a modest improvement in operating performance compared to full year 2020, assuming continued global economic recovery. Full-year 2021 net sales guidance is improved compared to previous guidance primarily due to increased Lithium sales and improving Catalysts trends offset by reduced expectations for the Bromine business as a result of higher raw material costs and supply chain disruptions. Revised EBITDA reflects higher net sales offset by higher corporate costs, primarily related to incentive compensation expense and foreign exchange. Higher EPS and net cash from operations reflects lower interest expense and tax rates. Net cash from operations is also expected to benefit from timing of working capital changes. Capital expenditures are trending near the high-end of the range, due to tighter labor markets and COVID-related travel restrictions in Western Australia. Pro forma revised guidance has been updated to reflect the sale of Albemarle’s Fine Chemistry Services (FCS) business to W. R. Grace, which closed on June 1, 2021.

	Revised	FCS Adjustment	Pro Forma Revised
	FY 2021 Guidance	(Jun 1 – Dec 31, 2021)	FY 2021 Guidance
Net sales	$3.3 – $3.4 billion	$95 – $105 million	$3.2 – $3.3 billion
Adjusted EBITDA	$810 – $860 million	$35 – $45 million	$775 – $815 million
Adjusted EBITDA Margin	24% – 25%		24% – 25%
Adjusted Diluted EPS	$3.60 – $4.00	$0.25 – $0.30	$3.35 – $3.70
Net Cash from Operations	$590 – $690 million	$40 – $45 million	$550 – $650 million
Capital Expenditures	$850 – $950 million	$4 – $8 million	$850 – $950 million

COVID-19 Response

Albemarle’s cross-functional Global Response Team continues to meet regularly to address employee health and safety and operational challenges. The company’s priority is always the health and well-being of its employees, customers, and communities. The company continues to focus on building in the flexibility needed to adjust for regional differences and changing conditions.

Second-Quarter Results

In millions, except per share amounts	Q2 2021		Q2 2020		$ Change		% Change
Net sales	$	773.9	$	764.0	$	9.8	1.3	%
Net income attributable to Albemarle Corporation	$	424.6	$	85.6	$	339.0	395.9	%
Adjusted EBITDA^(a)	$	194.6	$	185.2	$	9.4	5.1	%
Diluted earnings per share	$	3.62	$	0.80	$	2.82	352.5	%
Non-operating pension and OPEB items^(a)	(0.04)		(0.02)
Non-recurring and other unusual items^(a)	(2.69)		0.07
Adjusted diluted earnings per share^(b)	$	0.89	$	0.86	$	0.03	3.5	%


(a)	See Non-GAAP Reconciliations for further details.
(b)	Totals may not add due to rounding.

Net sales of $773.9 million increased by $9.8 million compared to the prior year quarter, primarily driven by an increase in sales from the company’s Lithium and Bromine business segments. Excluding the FCS business, net sales for the quarter increased 5% year-over-year.

Adjusted EBITDA of $194.6 million increased by $9.4 million from the prior year quarter based on higher sales and operating margins, partially offset by higher corporate expense primarily related to higher incentive compensation and foreign exchange. Excluding FCS, adjusted EBITDA was 13% higher when compared to the second quarter of 2020. Net income attributable to Albemarle of $424.6 million increased by $339.0 million, benefiting from a $429.4 million ($331.6 million after taxes) gain on the sale of the company’s FCS business.

The effective income tax rate for the second quarter of 2021 was 20.0% compared to 17.5% in the same period of 2020. The difference is largely due to tax expense recorded in the second quarter of 2021 for the gain on the sale of the FCS business. On an adjusted basis, the effective income tax rates were 17.5% and 18.9% for the second quarter of 2021 and 2020, respectively.

Business Segment Results

Lithium

In millions	Q2 2021		Q2 2020		$ Change		% Change
Net Sales	$	320.3	$	283.7	$	36.6	12.9	%
Adjusted EBITDA	$	109.4	$	94.5	$	14.9	15.8	%

Lithium net sales of $320.3 million increased $36.6 million (+13%) primarily driven by higher volumes (+17%) primarily related to accelerated orders under long-term agreements. Pricing in the quarter was slightly lower year over year (-4%) due to lower average pricing for carbonate and technical grade products. Adjusted EBITDA of $109.4 million increased $14.9 million primarily due to increased net sales and the impact of higher spodumene volumes at the Talison joint venture.

Current Trends:
Full-year 2021 volume growth is expected to be in the mid-teens year-over-year due to North American plant restarts, productivity improvements, and tolling. Average realized pricing is expected to increase sequentially but remain flat compared to 2020. Full-year 2021 adjusted EBITDA is expected to grow between 10% and 15% year over year. Full-year 2021 average margin is expected to remain below 35% due to higher lithium costs related to project start-ups and tolling costs partially offset by efficiency improvements.

Albemarle’s Wave 2 growth projects continue to progress. La Negra III/IV is in the commissioning phase and Kemerton I remains on track for construction completion later this year. To mitigate risks related to labor shortages and COVID-19 travel restrictions in Western Australia, the company prioritized completion of Kemerton I, with Kemerton II construction completion now expected by the end of the first quarter 2022. Kemerton I and II are expected to reach commercial production in 2022 following an approximately six month commissioning and qualification period.

Bromine Specialties

In millions	Q2 2021		Q2 2020		$ Change		% Change
Net Sales	$	279.7	$	232.8	$	47.0	20.2	%
Adjusted EBITDA	$	92.6	$	73.0	$	19.6	26.8	%

Bromine net sales of $279.7 million increased $47.0 million (+20%) with improved pricing (+9%) and volumes (+11%) driven by higher demand across the portfolio. Adjusted EBITDA of $92.6 million increased $19.6 million due to higher net sales. Cost savings initiatives and higher pricing helped offset raw materials cost increases.

Current Trends:
The company expects full-year 2021 adjusted EBITDA growth in the mid-single digits year-over-year, below previous outlook primarily due to a force majeure declaration by our chlorine supplier in the U.S. The company continues to see strength in certain end markets, including electronics, and building and construction. Volumes are also expected to be lower in the second half due to inventory drawdown and reduced production related to the U.S. Gulf Coast winter storms in the first quarter of 2021. Cost savings and higher pricing partially offset inflation in raw materials and freight.

Catalysts

In millions	Q2 2021		Q2 2020		$ Change		% Change
Net Sales	$	148.3	$	197.1	$	(48.7)	(24.7)	%
Adjusted EBITDA	$	21.2	$	22.8	$	(1.6)	(7.1)	%

Catalysts net sales of $148.3 million decreased $48.7 million (-25%) compared to the previous year, primarily due to lower volumes (-25%) while pricing was flat. Clean Fuels Technologies (CFT) volumes decreased due to timing of shipments. Fluid Catalytic Cracking (FCC) volumes were down slightly versus prior year, as a change in order patterns from a large North American customer offset generally higher FCC demand. Performance Catalyst Solutions (PCS) results improved due to product mix. Adjusted EBITDA of $21.2 million declined $1.6 million mostly due to lower sales. Also, second quarter 2020 results were understated by $12.0 million due to an out-of-period correction to cost of goods sold for inventory values.

Current Trends:
The company continues to expect full-year 2021 adjusted EBITDA to decline by between 30% and 40%. Market conditions are improving, but results are expected to be down from prior year primarily due to the impact of the U.S. Gulf Coast winter storm, product mix, and the previously disclosed change in order patterns from a large North American customer.

All Other

In millions	Q2 2021		Q2 2020		$ Change		% Change
Net Sales	$	25.5	$	50.5	$	(25.0)	(49.6)	%
Adjusted EBITDA	$	8.4	$	18.6	$	(10.2)	(54.9)	%

Other operations represents the company’s recently sold FCS business. FCS net sales of $25.5 million declined $25.0 million and adjusted EBITDA of $8.4 million declined $10.2 million. Second-quarter 2021 results include only two months of performance following the sale of FCS on June 1, 2021. Albemarle recorded a gain of $429.4 million ($331.6 million after taxes) related to the sale of the FCS business.

Balance Sheet and Liquidity

As of June 30, 2021, Albemarle had estimated liquidity of approximately $2.2 billion, including $823.6 million of cash and equivalents, the full $1.0 billion available under the company’s revolver, $270.0 million remaining under its delayed draw term loan and $132.0 million on other available credit lines. Total debt was $2.0 billion, representing net debt to adjusted EBITDA of approximately 1.5 times.

Cash Flow and Capital Deployment

Cash from operations for the six months ended June 30, 2021, of $385.9 million increased $177.9 million versus the prior year driven by working capital inflows and higher revenues in the company’s Lithium and Bromine segments. Capital expenditures of $396.9 million decreased by approximately $22.0 million versus the prior year as the company nears completion of its Wave 2 Lithium expansion projects.

Albemarle’s primary capital allocation priorities are to grow profitably, fund its dividend, and maintain its financial flexibility and our Investment Grade credit rating.

In May, the board declared a quarterly dividend of $0.39 per share, an increase over the quarterly dividend paid in 2020. This is Albemarle’s 27th consecutive year of dividend increases. The share repurchase authorization remains in place; however, the company has no near-term plans to execute share buybacks.

Earnings Call

Date:	Thursday, August 5, 2021
Time:	9:00 AM Eastern time
Dial-in (U.S.):	844-347-1034
Dial-in (International):	209-905-5910
Passcode:	6747789

The company’s earnings presentation and supporting material are available on Albemarle’s website at https://investors.albemarle.com.

About Albemarle

Albemarle Corporation (NYSE: ALB) is a global specialty chemicals company with leading positions in lithium, bromine and refining catalysts. We think beyond business-as-usual to power the potential of companies in many of the world’s largest and most critical industries, such as energy, electronics, and transportation. We actively pursue a sustainable approach to managing our diverse global footprint of world-class resources. In conjunction with our highly experienced and talented global teams, our deep-seated values, and our collaborative customer relationships, we create value-added and performance-based solutions that enable a safer and more sustainable future.

We regularly post information to www.albemarle.com, including notification of events, news, financial performance, investor presentations and webcasts, non-GAAP reconciliations, SEC filings and other information regarding our company, its businesses and the markets it serves.

Forward-Looking Statements

Some of the information presented in this press release, the conference call and discussions that follow, including, without limitation, information related to the timing of active and proposed projects, product development, production capacity, committed volumes, market trends, pricing, financial flexibility, expected growth, anticipated return on opportunities, earnings and demand for our products, input costs, productivity improvements, surcharges, tax rates, stock repurchases, dividends, cash flow generation, costs and cost synergies, capital projects, future acquisition and divestiture transactions, expected benefits from proposed transactions, economic trends, outlook and all other information relating to matters that are not historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from the views expressed. Factors that could cause actual results to differ materially from the outlook expressed or implied in any forward-looking statement include, without limitation: changes in economic and business conditions; changes in financial and operating performance of our major customers and industries and markets served by us; the timing of orders received from customers; the gain or loss of significant customers; competition from other manufacturers; changes in the demand for our products or the end-user markets in which our products are sold; limitations or prohibitions on the manufacture and sale of our products; availability of raw materials; increases in the cost of raw materials and energy, and our ability to pass through such increases to our customers; changes in our markets in general; fluctuations in foreign currencies; changes in laws and government regulation impacting our operations or our products; the occurrence of regulatory actions, proceedings, claims or litigation; the occurrence of cyber-security breaches, terrorist attacks, industrial accidents, natural disasters or climate change; hazards associated with chemicals manufacturing; the inability to maintain current levels of product or premises liability insurance or the denial of such coverage; political unrest affecting the global economy, including adverse effects from terrorism or hostilities; political instability affecting our manufacturing operations or joint ventures; changes in accounting standards; the inability to achieve results from our global manufacturing cost reduction initiatives as well as our ongoing continuous improvement and rationalization programs; changes in the jurisdictional mix of our earnings and changes in tax laws and rates; changes in monetary policies, inflation or interest rates that may impact our ability to raise capital or increase our cost of funds, impact the performance of our pension fund investments and increase our pension expense and funding obligations; volatility and uncertainties in the debt and equity markets; technology or intellectual property infringement, including cyber-security breaches, and other innovation risks; decisions we may make in the future; the ability to successfully execute, operate and integrate acquisitions and divestitures; uncertainties as to the duration and impact of the coronavirus (COVID-19) pandemic; and the other factors detailed from time to time in the reports we file with the SEC, including those described under “Risk Factors” in our most recent Annual Report on Form 10-K any subsequently filed Quarterly Reports on Form 10-Q. These forward-looking statements speak only as of the date of this press release. We assume no obligation to provide any revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws.

Albemarle Corporation and Subsidiaries
Consolidated Statements of Income
(In Thousands Except Per Share Amounts) (Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net sales	$	773,896	$	764,049	$	1,603,187	$	1,502,894
Cost of goods sold	525,479		530,690		1,091,083		1,027,517
Gross profit	248,417		233,359		512,104		475,377
Selling, general and administrative expenses	121,516		106,949		214,703		208,826
Research and development expenses	13,976		14,210		28,612		30,307
Gain on sale of business	(429,408)		—		(429,408)		—
Operating profit	542,333		112,200		698,197		236,244
Interest and financing expenses	(7,152)		(17,852)		(51,034)		(34,737)
Other income (expense), net	14		(6,273)		11,326		2,041
Income before income taxes and equity in net income of unconsolidated investments	535,195		88,075		658,489		203,548
Income tax expense	106,985		15,431		129,092		33,873
Income before equity in net income of unconsolidated investments	428,210		72,644		529,397		169,675
Equity in net income of unconsolidated investments (net of tax)	17,998		31,114		34,509		57,718
Net income	446,208		103,758		563,906		227,393
Net income attributable to noncontrolling interests	(21,608)		(18,134)		(43,629)		(34,565)
Net income attributable to Albemarle Corporation	$	424,600	$	85,624	$	520,277	$	192,828
Basic earnings per share	$	3.63	$	0.81	$	4.54	$	1.81
Diluted earnings per share	$	3.62	$	0.80	$	4.51	$	1.81

Weighted-average common shares outstanding – basic	116,809		106,329		114,700		106,278
Weighted-average common shares outstanding – diluted	117,436		106,535		115,383		106,524

Albemarle Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In Thousands) (Unaudited)

	June 30,		December 31,
	2021		2020
ASSETS
Current assets:
Cash and cash equivalents	$	823,572	$	746,724
Trade accounts receivable	455,222		530,838
Other accounts receivable	58,256		61,958
Inventories	732,563		750,237
Other current assets	81,741		116,427
Total current assets	2,151,354		2,206,184
Property, plant and equipment	7,596,684		7,427,641
Less accumulated depreciation and amortization	2,086,085		2,073,016
Net property, plant and equipment	5,510,599		5,354,625
Investments	907,080		656,244
Other assets	256,081		219,268
Goodwill	1,640,720		1,665,520
Other intangibles, net of amortization	331,092		349,105
Total assets	$	10,796,926	$	10,450,946
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	535,153	$	483,221
Accrued expenses	317,954		440,763
Current portion of long-term debt	623		804,677
Dividends payable	45,428		40,937
Income taxes payable	85,770		32,251
Total current liabilities	984,928		1,801,849
Long-term debt	2,043,794		2,767,381
Postretirement benefits	47,371		48,075
Pension benefits	309,712		340,818
Other noncurrent liabilities	616,912		629,377
Deferred income taxes	428,438		394,852
Commitments and contingencies
Equity:
Albemarle Corporation shareholders’ equity:
Common stock	1,169		1,069
Additional paid-in capital	2,907,981		1,438,038
Accumulated other comprehensive loss	(328,001)		(326,132)
Retained earnings	3,584,400		3,155,252
Total Albemarle Corporation shareholders’ equity	6,165,549		4,268,227
Noncontrolling interests	200,222		200,367
Total equity	6,365,771		4,468,594
Total liabilities and equity	$	10,796,926	$	10,450,946

Albemarle Corporation and Subsidiaries
Selected Consolidated Cash Flow Data
(In Thousands) (Unaudited)

	Six Months Ended June 30,
	2021		2020
Cash and cash equivalents at beginning of year	$	746,724	$	613,110
Cash flows from operating activities:
Net income	563,906		227,393
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization	123,683		111,535
Gain on sale of business	(429,408)		—
Stock-based compensation and other	8,425		9,765
Equity in net income of unconsolidated investments (net of tax)	(34,509)		(57,718)
Dividends received from unconsolidated investments and nonmarketable securities	27,420		12,984
Pension and postretirement benefit	(8,465)		(3,312)
Pension and postretirement contributions	(20,266)		(6,692)
Unrealized gain on investments in marketable securities	(2,384)		(1,278)
Loss on early extinguishment of debt	28,955		—
Deferred income taxes	27,708		8,990
Working capital changes	7,942		(156,579)
Non-cash transfer of 40% value of construction in progress of Kemerton plant to MRL	96,185		87,750
Other, net	(3,339)		(24,921)
Net cash provided by operating activities	385,853		207,917
Cash flows from investing activities:
Acquisitions, net of cash acquired	—		(22,572)
Capital expenditures	(396,915)		(418,991)
Cash proceeds from divestitures, net	290,467		—
Sales of marketable securities, net	4,553		1,496
Investments in equity and other corporate investments	(286)		(486)
Net cash used in investing activities	(102,181)		(440,553)
Cash flows from financing activities:
Proceeds from issuance of common stock	1,453,888		—
Repayments of long-term debt and credit agreements	(1,173,823)		—
Proceeds from borrowings of credit agreements	—		452,163
Other debt repayments, net	(325,316)		12,956
Fees related to early extinguishment of debt	(24,877)		—
Dividends paid to shareholders	(86,637)		(79,909)
Dividends paid to noncontrolling interests	(43,698)		(14,286)
Proceeds from exercise of stock options	14,335		10,809
Withholding taxes paid on stock-based compensation award distributions	(7,047)		(4,019)
Other	(1,359)		(2,669)
Net cash (used in) provided by financing activities	(194,534)		375,045
Net effect of foreign exchange on cash and cash equivalents	(12,290)		(18,823)
Increase in cash and cash equivalents	76,848		123,586
Cash and cash equivalents at end of period	$	823,572	$	736,696

Albemarle Corporation and Subsidiaries
Consolidated Summary of Segment Results
(In Thousands) (Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net sales:
Lithium	$	320,334	$	283,722	$	599,310	$	520,540
Bromine Specialties	279,748		232,779		560,195		464,371
Catalysts	148,344		197,053		368,587		404,260
All Other	25,470		50,495		75,095		113,723
Total net sales	$	773,896	$	764,049	$	1,603,187	$	1,502,894

Adjusted EBITDA:
Lithium	$	109,441	$	94,536	$	215,877	$	173,173
Bromine Specialties	92,646		73,041		187,286		156,303
Catalysts	21,164		22,777		46,591		70,247
All Other	8,379		18,598		29,858		41,422
Corporate	(37,002)		(23,759)		(54,930)		(59,587)
Total adjusted EBITDA	$	194,628	$	185,193	$	424,682	$	381,558

See accompanying non-GAAP reconciliations below.

Additional Information

It should be noted that adjusted net income attributable to Albemarle Corporation, adjusted diluted earnings per share, non-operating pension and OPEB items per diluted share, non-recurring and other unusual items per diluted share, adjusted effective income tax rates, EBITDA, adjusted EBITDA, EBITDA margin and adjusted EBITDA margin are financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States, or GAAP. These non-GAAP measures should not be considered as alternatives to Net income attributable to Albemarle Corporation (“earnings”) or other comparable measures calculated and reported in accordance with GAAP. These measures are presented here to provide additional useful measurements to review the company’s operations, provide transparency to investors and enable period-to-period comparability of financial performance. The company’s chief operating decision maker uses these measures to assess the ongoing performance of the company and its segments, as well as for business and enterprise planning purposes.

A description of other non-GAAP financial measures that Albemarle uses to evaluate its operations and financial performance, and reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP can be found on the following pages of this press release, which is also is available on Albemarle’s website at https://investors.albemarle.com. The company does not provide a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP, as the company is unable to estimate significant non-recurring or unusual items without unreasonable effort. The amounts and timing of these items are uncertain and could be material to the company’s results calculated in accordance with GAAP.

ALBEMARLE CORPORATION AND SUBSIDIARIES

Non-GAAP Reconciliations

(Unaudited)

See below for a reconciliation of adjusted net income attributable to Albemarle Corporation, EBITDA and adjusted EBITDA, the non-GAAP financial measures, to Net income attributable to Albemarle Corporation (“earnings”), the most directly comparable financial measure calculated and reported in accordance with GAAP. Adjusted earnings is defined as earnings before the non-recurring, other unusual and non-operating pension and other post-employment benefit (OPEB) items as listed below. The non-recurring and unusual items may include acquisition and integration related costs, gains or losses on sales of businesses, restructuring charges, facility divestiture charges and other significant non-recurring items. EBITDA is defined as earnings before interest and financing expenses, income taxe expense, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA plus or minus the non-recurring, other unusual and non-operating pension and OPEB items as listed below.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
In thousands, except percentages and per share amounts	2021			2020			2021			2020
Net income attributable to Albemarle Corporation	$	424,600		$	85,624		$	520,277		$	192,828
Add back:
Non-operating pension and OPEB items (net of tax)	(4,273)			(2,299)			(8,540)			(4,610)
Non-recurring and other unusual items (net of tax)	(315,996)			7,907			(283,235)			9,400
Adjusted net income attributable to Albemarle Corporation	$	104,331		$	91,232		$	228,502		$	197,618

Adjusted diluted earnings per share	$	0.89		$	0.86		$	1.98		$	1.86

Weighted-average common shares outstanding – diluted	117,436			106,535			115,383			106,524

Net income attributable to Albemarle Corporation	$	424,600		$	85,624		$	520,277		$	192,828
Add back:
Interest and financing expenses	7,152			17,852			51,034			34,737
Income tax expense	106,985			15,431			129,092			33,873
Depreciation and amortization	61,423			57,841			123,683			111,535
EBITDA	600,160			176,748			824,086			372,973
Non-operating pension and OPEB items	(5,471)			(2,895)			(10,936)			(5,803)
Non-recurring and other unusual items	(400,061)			11,340			(388,468)			14,388
Adjusted EBITDA	$	194,628		$	185,193		$	424,682		$	381,558

Net sales	$	773,896		$	764,049		$	1,603,187		$	1,502,894
EBITDA margin	77.6		%	23.1		%	51.4		%	24.8		%
Adjusted EBITDA margin	25.1		%	24.2		%	26.5		%	25.4		%

See below for a reconciliation of adjusted EBITDA on a segment basis, the non-GAAP financial measure, to Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with GAAP (in thousands, except percentages).

	Lithium		Bromine Specialties		Catalysts		Reportable Segments Total		All Other		Corporate		Consolidated Total		% of Net Sales
Three months ended June 30, 2021
Net income (loss) attributable to Albemarle Corporation	$	74,593	$	80,148	$	8,446	$	163,187	$	7,972	$	253,441	$	424,600	54.9	%
Depreciation and amortization	33,497		12,498		12,718		58,713		407		2,303		61,423		7.9	%
Non-recurring and other unusual items	1,351		—		—		1,351		—		(401,412)		(400,061)		(51.7)	%
Interest and financing expenses	—		—		—		—		—		7,152		7,152		0.9	%
Income tax expense	—		—		—		—		—		106,985		106,985		13.8	%
Non-operating pension and OPEB items	—		—		—		—		—		(5,471)		(5,471)		(0.7)	%
Adjusted EBITDA	$	109,441	$	92,646	$	21,164	$	223,251	$	8,379	$	(37,002)	$	194,628	25.1	%

Three months ended June 30, 2020
Net income (loss) attributable to Albemarle Corporation	$	66,038	$	60,692	$	10,702	$	137,432	$	16,425	$	(68,233)	$	85,624	11.2	%
Depreciation and amortization	28,498		12,349		12,075		52,922		2,173		2,746		57,841		7.6	%
Non-recurring and other unusual items	—		—		—		—		—		11,340		11,340		1.5	%
Interest and financing expenses	—		—		—		—		—		17,852		17,852		2.3	%
Income tax expense	—		—		—		—		—		15,431		15,431		2.1	%
Non-operating pension and OPEB items	—		—		—		—		—		(2,895)		(2,895)		(0.4)	%
Adjusted EBITDA	$	94,536	$	73,041	$	22,777	$	190,354	$	18,598	$	(23,759)	$	185,193	24.2	%

Six months ended June 30, 2021
Net income (loss) attributable to Albemarle Corporation	$	144,965	$	162,261	$	21,362	$	328,588	$	27,988	$	163,701	$	520,277	32.5	%
Depreciation and amortization	65,303		25,025		25,229		115,557		1,870		6,256		123,683		7.7	%
Non-recurring and other unusual items	5,609		—		—		5,609		—		(394,077)		(388,468)		(24.2)	%
Interest and financing expenses	—		—		—		—		—		51,034		51,034		3.2	%
Income tax expense	—		—		—		—		—		129,092		129,092		8.1	%
Non-operating pension and OPEB items	—		—		—		—		—		(10,936)		(10,936)		(0.7)	%
Adjusted EBITDA	$	215,877	$	187,286	$	46,591	$	449,754	$	29,858	$	(54,930)	$	424,682	26.5	%

Six months ended June 30, 2020
Net income (loss) attributable to Albemarle Corporation	$	119,278	$	132,357	$	45,594	$	297,229	$	37,271	$	(141,672)	$	192,828	12.8	%
Depreciation and amortization	53,895		23,946		24,653		102,494		4,151		4,890		111,535		7.4	%
Non-recurring and other unusual items	—		—		—		—		—		14,388		14,388		1.0	%
Interest and financing expenses	—		—		—		—		—		34,737		34,737		2.3	%
Income tax expense	—		—		—		—		—		33,873		33,873		2.3	%
Non-operating pension and OPEB items	—		—		—		—		—		(5,803)		(5,803)		(0.4)	%
Adjusted EBITDA	$	173,173	$	156,303	$	70,247	$	399,723	$	41,422	$	(59,587)	$	381,558	25.4	%

Non-operating pension and OPEB items, consisting of mark-to-market actuarial gains/losses, settlements/curtailments, interest cost and expected return on assets, are not allocated to Albemarle’s operating segments and are included in the Corporate category. In addition, the company believes that these components of pension cost are mainly driven by market performance, and the company manages these separately from the operational performance of the company’s businesses. In accordance with GAAP, these non-operating pension and OPEB items are included in Other income (expenses), net. Non-operating pension and OPEB items were as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Interest cost	$	5,430	$	7,133	$	10,858	$	14,288
Expected return on assets	(10,901)		(10,028)		(21,794)		(20,091)
Total	$	(5,471)	$	(2,895)	$	(10,936)	$	(5,803)

In addition to the non-operating pension and OPEB items disclosed above, the company has identified certain other items and excluded them from Albemarle’s adjusted net income calculation for the periods presented. A listing of these items, as well as a detailed description of each follows below (per diluted share):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Restructuring and other⁽¹⁾	$	—	$	0.04	$	0.01	$	0.06
Acquisition and integration related costs⁽²⁾	0.01		0.04		0.03		0.06
Albemarle Foundation contribution⁽³⁾	0.13		—		0.13		—
Gain on sale of business⁽⁴⁾	(2.82)		—		(2.87)		—
Loss on early extinguishment of debt⁽⁵⁾	0.01		—		0.21		—
Other⁽⁶⁾	0.04		(0.01)		0.10		(0.02)
Discrete tax items⁽⁷⁾	(0.06)		—		(0.06)		(0.01)
Total non-recurring and other unusual items	$	(2.69)	$	0.07	$	(2.45)	$	0.09


(1)	During the three and six months ended June 30, 2021, Albemarle recorded facility closure costs related to offices in Germany, and severance expenses in Germany and Belgium, in Selling, general and administrative expenses of $0.8 million and $1.5 million ($0.5 million and $1.1 million after income taxes, or less than $0.01 and $0.01 per share), respectively. In 2020, Albemarle recorded severance expenses as part of business reorganization plans, impacting each of its businesses and Corporate, primarily in the U.S., Germany and with its Jordanian joint venture partner. During the three months ended June 30, 2020, the company recorded expenses of $6.7 million ($4.7 million after income taxes, or $0.04 per share) in Selling, general and administrative expenses. During the six months ended June, 2020, the company recorded severance expenses in Cost of goods sold, Selling, general and administrative expenses and Net income attributable to noncontrolling interest of $0.7 million, $8.2 million and a $0.3 million gain ($6.2 million after income taxes, or $0.06 per share), respectively. The balance of unpaid severance is recorded in Accrued expenses and is expected to primarily be paid through 2021.

(2)	Costs related to the acquisition, integration and potential divestitures of various significant projects, recorded in Selling, general and administrative expenses for the three and six months ended June 30, 2021 were $1.9 million and $4.1 million ($1.5 million and $3.2 million after income taxes, or $0.01 and $0.03 per share), respectively, and for the three and six months ended June 30, 2020 were $5.5 million and $8.4 million ($4.2 million and $6.5 million after income taxes, or $0.04 and $0.06 per share), respectively.

(3)	Included in Selling, general and administrative expenses for the three and six months ended June 30, 2021 is a charitable contribution of $20.0 million ($15.5 million after income taxes, or $0.13 per share), using a portion of the proceeds received from the FCS divestiture, to the Albemarle Foundation, a non-profit organization that sponsors grants, health and social projects, educational initiatives, disaster relief, matching gift programs, scholarships and other charitable initiatives in locations where Albemarle’s employees live and the company operates. This contribution is in addition to the normal annual contribution made to the Albemarle Foundation by the company, and is significant in size and nature in that it is intended to provide more long-term benefits in these communities.

(4)	Included in Gain on sale of business, for the three and six months ended June 30, 2021 is $429.4 million ($331.6 million after discrete income taxes, or $2.87 per share) related to the sale of the FCS business.

(5)	Included in Interest and financing expenses for the three and six months ended June 30, 2021 is a loss on early extinguishment of debt of $1.2 million and $29.0 million ($0.8 million and $23.8 million after income taxes, or $0.01 and $0.21 per share), respectively, representing the tender premiums, fees, unamortized discounts and unamortized deferred financing costs from the redemption of $1.5 billion in debt using the proceeds from the issuance of common stock.

(6)	Other adjustments for the three months ended June 30, 2021 included amounts recorded in:
	•	Selling, general and administrative expenses – $4.0 million of a loss resulting from the sale of property, plant and equipment, $1.6 million of charges for an environmental reserve at a site not part of the company’s operations and $1.4 million of expenses primarily related to non-routine labor and compensation related costs that are outside normal compensation arrangements.
	•	Other income, net – $0.3 million of a gain resulting from the adjustment of indemnification obligations related to previously disposed businesses.
	After income taxes, these charges totaled $4.9 million, or $0.04 per share.

	Other adjustments for the six months ended June 30, 2021 included amounts recorded in:
	•	Selling, general and administrative expenses – $6.0 million of expenses primarily related to non-routine labor and compensation related costs that are outside normal compensation arrangements, a $4.0 million loss resulting from the sale of property, plant and equipment and $1.6 million of charges for an environmental reserve at a site not part of the company’s operations.
	•	Other income, net – $3.6 million of expenses primarily related to asset retirement obligation charges to update an estimate at a site formerly owned by Albemarle.
	After income taxes, these charges totaled $11.4 million, or $0.10 per share.

	Other adjustments for the three months ended June 30, 2020 included amounts recorded in:
	•	Other expenses, net – $0.9 million ($0.6 million after income taxes, or $0.01 per share) net gain primarily relating to the sale of idle properties in Germany.

	Other adjustments for the six months ended June 30, 2020 included amounts recorded in:
	•	Other expenses, net – $2.7 million gain resulting from the settlement of a legal matter related to a business sold and $0.8 million net gain primarily relating to the sale of idle properties in Germany, partially offset by a $0.8 million loss resulting from the adjustment of indemnifications related to previously disposed businesses.
	After income taxes, these net gains totaled $1.7 million, or $0.02 per share.

(7)	Included in Income tax expense for the three and six months ended June 30, 2021 are discrete net tax benefits of $7.6 million, or $0.06 per share and $6.6 million, or $0.06 per share, respectively. The net benefit for the three months is primarily related to excess tax benefits realized from stock-based compensation arrangements and the revaluation of deferred taxes due to tax rate changes. The net benefit for the six months is primarily related to the release of a foreign valuation allowance, excess tax benefits realized from stock-based compensation arrangements, and the revaluation of deferred taxes due to tax rate changes, partially offset by tax expense due to an out-of-period adjustment regarding an overstated deferred tax liability for the three-month period ended December 31, 2017.

	Included in Income tax expense for the three and six months ended June 30, 2020 are discrete net tax benefits of $0.5 million, or less than $0.01 per share, and $1.6 million, or $0.01 per share. The net benefit for the three months is primarily related to lapses in statute of limitations. The net benefit for the six months is primarily related to excess tax benefits realized from stock-based compensation arrangements.

See below for a reconciliation of the adjusted effective income tax rate, the non-GAAP financial measure, to the effective income tax rate, the most directly comparable financial measure calculated and reported in accordance with GAAP (in thousands, except percentages).

	Income before income taxes and equity in net income of unconsolidated investments		Income tax expense		Effective income tax rate
Three months ended June 30, 2021
As reported	$	535,195	$	106,985	20.0	%
Non-recurring, other unusual and non-operating pension and OPEB items	(404,383)		(84,114)
As adjusted	$	130,812	$	22,871	17.5	%

Three months ended June 30, 2020
As reported	$	88,075	$	15,431	17.5	%
Non-recurring, other unusual and non-operating pension and OPEB items	8,445		2,837
As adjusted	$	96,520	$	18,268	18.9	%

Six months ended June 30, 2021
As reported	$	658,489	$	129,092	19.6	%
Non-recurring, other unusual and non-operating pension and OPEB items	(370,457)		(78,682)
As adjusted	$	288,032	$	50,410	17.5	%

Six months ended June 30, 2020
As reported	$	203,548	$	33,873	16.6	%
Non-recurring, other unusual and non-operating pension and OPEB items	8,906		3,795
As adjusted	$	212,454	$	37,668	17.7	%

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SOURCE Albemarle Corporation

August 4, 2021 4:20 pm

Aaron’s Directors Declare Cash Dividend

PR Newswire

ATLANTA, Aug. 4, 2021 /PRNewswire/ — The Aaron’s Company, Inc. (NYSE: AAN), a leading, technology-enabled, omnichannel provider of lease-to-own and purchase solutions, today announced that its Board of Directors has declared a regular quarterly cash dividend of $0.10 per share and declared such dividend payable October 5, 2021, to shareholders of record as of the close of business on September 16, 2021.

About Aaron’s
Headquartered in Atlanta, The Aaron’s Company, Inc. (NYSE: AAN), is a leading, technology-enabled, omnichannel provider of lease-to-own and purchase solutions. Aaron’s engages in the sales and lease ownership and specialty retailing of furniture, consumer electronics, appliances, and accessories through its approximately 1,300 Company-operated and franchised stores in 47 states and Canada, as well as its e-commerce platform, Aarons.com. For more information, visit investor.aarons.com or Aarons.com.

View original content to download multimedia:https://www.prnewswire.com/news-releases/aarons-directors-declare-cash-dividend-301348675.html

SOURCE The Aaron’s Company, Inc.

August 4, 2021 4:20 pm

Universal Corporation Announces Quarterly Dividend

PR Newswire

RICHMOND, Va., Aug. 4, 2021 /PRNewswire/ — George C. Freeman, III, Chairman, President, and Chief Executive Officer of Universal Corporation (NYSE:UVV), announced today that the Company’s Board of Directors declared a quarterly dividend of seventy-eight cents($0.78) per share on the common shares of the Company, payable November 1, 2021, to common shareholders of record at the close of business on October 11, 2021.

Universal Corporation (NYSE: UVV), headquartered in Richmond, Virginia, is a global business-to-business agri-products supplier to consumer product manufacturers, operating in over 30 countries on five continents, that sources and processes leaf tobacco and plant-based ingredients. Tobacco has been the Company’s principal focus since its founding in 1918, and Universal is the leading global leaf tobacco supplier. Through the Company’s plant-based ingredients platform, it provides a variety of value-added manufacturing processes to produce high-quality, specialty vegetable- and fruit-based ingredients for the food and beverage end markets. Universal has been finding innovative solutions to serve its customers and meet their agri-product needs for more than 100 years. The Company’s revenues for the fiscal year ended March 31, 2021, were $2.0 billion. Visit www.universalcorp.com for more information on Universal Corporation and the latest Company news.

View original content to download multimedia:https://www.prnewswire.com/news-releases/universal-corporation-announces-quarterly-dividend-301348506.html

SOURCE Universal Corporation

August 4, 2021 4:20 pm

Trecora Resources Announces Second Quarter 2021 Results

— Second quarter net income and Adjusted EBITDA increased year-over-year due to economic recovery and strong demand from end-use markets

— Second quarter net income from continuing operations of $2.3 million compared to net loss from continuing operations of $1.9 million in the second quarter of 2020

— Second quarter Adjusted EBITDA from continuing operations of $8.1 million compared to Adjusted EBITDA from continuing operations of $4.2 million in the second quarter of 2020, driven by sharply improved results for both Specialty Petrochemicals and Specialty Waxes

— Repurchased 633,273 shares year-to-date, or approximately $5 million, under $20 million share repurchase authorization

— Strong balance sheet with ample liquidity to fund growth initiatives

— Conference call at 10:00 am ET, August 5, 2021

PR Newswire

SUGAR LAND, Texas, Aug. 4, 2021 /PRNewswire/ — Trecora Resources (“Trecora” or the “Company”) (NYSE: TREC), a leading provider of specialty hydrocarbons and specialty waxes, today announced financial results for the second quarter ended June 30, 2021.

Executive Commentary

“We delivered strong top and bottom line growth in the second quarter of 2021 as compared to the same period last year,” stated Pat Quarles, Trecora’s President and Chief Executive Officer. “The reopening of economies and an improving macroeconomic environment in the United States led to a significant improvement in demand across all of our end-markets, particularly for our prime products and waxes. This quarter demonstrates the strength of our business model as the economy continues to recover from the pandemic impacts and our industry recovers from the Texas freeze event in February. Product revenues for our Specialty Waxes segment were up 26.1% year-over-year, primarily reflecting increases in wax pricing. For our Specialty Petrochemicals segment, an 84.9% year-over-year increase in product revenues was driven by strong sales volumes as well as higher product prices. These factors led to second quarter net income from continuing operations of approximately $2.3 million and Adjusted EBITDA from continuing operations of $8.1 million, nearly doubling last year’s second quarter Adjusted EBITDA.”

“We continue to focus on maintaining a strong balance sheet and delivering on our organic growth programs while seeking additional external opportunites to grow. In every instance, we are commited to increasing our earnings and cashflow and creating long-term value for our stockholders. As part of that commitment, during the quarter we completed the repurchase of $5 million of shares of the $20 million authorization from our Board,” concluded Mr. Quarles.

Sami Ahmad, Trecora’s Chief Financial Officer stated, “Our enhanced operational efficiencies and strong competitive positioning, coupled with improving execution at Trecora Chemical, enabled us to capitalize on the economic upturn and generate improved profitability in the second quarter. Cash used in operations in the second quarter was $4.3 million as the growth in the business resulted in an increase in working capital of nearly $16 million. We are extremely confident in our liquidity position, with cash at the end of the quarter of $39.1 million, and an undrawn revolver. Total bank debt at the end of the quarter was $44.0 million. The strength of our balance sheet affords us a great amount of financial flexibility to manage our business and execute on our strategic plan,” concluded Mr. Ahmad.

Second Quarter 2021 Financial Results

Net income in the second quarter of 2021 was $2.3 million, or $0.09 per diluted share[1], compared to net loss of $1.9 million, or $(0.07) per diluted share[2], in the second quarter of 2020. Adjusted EBITDA from continuing operations was $8.1 million for the second quarter of 2021, compared with Adjusted EBITDA from continuing operations of $4.2 million in the second quarter of 2020.

Total revenue in the second quarter of 2021 was $68.8 million, compared to $40.7 million in the second quarter of 2020. This 69.3% year-over-year increase was primarily due to higher sales volumes and selling prices as reopening trends and economic recovery continue, leading to greater demand in our end-markets.

Gross profit in the second quarter of 2021 was $11.0 million, or 16.0% of total revenues, compared to $6.2 million, or 15.2% of total revenues in the second quarter of 2020. Operating income in the second quarter of 2021 was $3.1 million, compared to operating loss of $0.3 million in the second quarter of 2020.

Specialty Petrochemicals

Specialty Petrochemicals net income was $5.3 million in the second quarter of 2021, compared to net income of $1.4 million in the second quarter of 2020, including the benefit of $1.4 million settlement with a utility provider for costs related to the Texas freeze event. Specialty Petrochemicals volume in the second quarter of 2021 was 20.0 million gallons, compared to 17.2 million gallons in the first quarter of 2021 and 15.3 million gallons in the second quarter of 2020. Sales revenues for our Specialty Petrochemicals products increased 84.9% year-over-year. This was primarily due to the economic recovery which resulted in greater demand for our products as well as higher product prices.

Prime product volume in the second quarter of 2021 was 16.9 million gallons, compared to 14.7 million gallons in the first quarter of 2021 and 13.1 million gallons in the second quarter of 2020. By-product sales volume was 3.1 million gallons in the second quarter of 2021. Adjusted EBITDA from continuing operations for Specialty Petrochemicals in the second quarter of 2021 was $9.7 million, compared to $5.0 million in the second quarter of 2020.

Dollar amounts in thousands/rounding may apply	THREE MONTHS ENDED
	JUNE 30 ,
	2021	2020	% Change
Product sales	$57,763	$31,236	85%
Processing fees	1,527	1,159	32%
Gross revenues	$59,290	$32,395	83%
Operating profit before depreciation and amortization	9,741	4,974	96%
Operating profit	6,955	2,354	196%
Net profit before taxes	6,709	1,648	307%
Depreciation and amortization	2,787	2,621	6%
Adjusted EBITDA	9,737	4,998	95%
Capital expenditures	3,692	5,382	(31%)

Specialty Waxes

Specialty Waxes generated revenues of approximately $9.6 million in the second quarter of 2021, a $0.9 million increase from $8.7 million in the first quarter of 2021, and a $1.3 million increase from the second quarter of 2020. Revenues included approximately $6.9 million of wax product sales in the second quarter of 2021, 26.1% higher than the same quarter last year, due to higher selling prices; average selling prices for our specialty waxes increased by more than 20%. Wax sales volumes increased approximately 5.2% from the second quarter of 2020.

Adjusted EBITDA for Specialty Waxes in the second quarter of 2021 was $1.3 million, compared to $0.9 million in the second quarter of 2020. Specialty Waxes net loss was $0.2 million in the second quarter of 2021, compared to net loss of $0.3 million in the second quarter of 2020.

Processing fees, which were approximately $2.7 million in the second quarter of 2021, a decrease of 5.2%, or approximately $0.1 million, from the second quarter of 2020. The decline was due to customer supply chain disruptions combined with residual impacts from the Texas freeze event which caused the ramp up on new custom processing projects to take longer than expected.

Dollar amounts in thousands/rounding may apply		THREE MONTHS ENDED
		JUNE 30,
			2021	2020	% Change
Product sales	$6,897			$5,471	26%
Processing fees	2,662			2,808	(5%)
Gross revenues	$9,559			$8,279	16%
Operating profit before depreciation and amortization	1,321			854	55%
Operating loss	(198)			(485)	59%
Net loss before taxes	(184)			(445)	59%
Depreciation and amortization	1,518			1,338	14%
Adjusted EBITDA	1,336			892	50%
Capital expenditures	191			285	(33%)

First Half 2021 Financial Results

Net loss from continuing operations in the first half of 2021 was $2.1 million, or $(0.09) per diluted share[3], compared to net income from continuing operations of $4.0 million, or $0.16 per diluted share[4], for the same period in 2020. The first half of 2021 included the negative impact of the Texas freeze event in February, estimated to be $3.5 million, while the first half of 2020 included an income tax benefit of $4.8 million. Adjusted EBITDA from continuing operations in the first half of 2021 was $7.6 million, compared to Adjusted EBITDA from continuing operations of $9.7 million for the same period in 2020.

Total revenue in the first half of 2021 was $123.4 million, compared to $102.7 million for the same period in 2020, an increase of 20.1%. This increase was primarily due to higher sales volumes and higher selling prices as a result of the economic recovery from COVID-19 and increased costs of natural gasoline.

Gross profit in the first half of 2021 was $13.4 million, or 10.8% of total revenues, compared to $14.2 million, or 13.9% of total revenues, for the same period in 2020. Operating loss in the first half of 2021 was $2.1 million, compared to operating income of $0.9 million for the same period in 2020.

Specialty Petrochemicals

Specialty Petrochemicals net income was $5.5 million in the first half of 2021, compared to net income of $6.0 million for the same period in 2020. Specialty Petrochemicals volume in the first half of 2021 was 37.2 million gallons, compared to 35.1 million gallons for the same period in 2020. Prime product volume in the first half of 2021 was 31.5 million gallons, compared to 29.3 million gallons in the same period 2020. Adjusted EBITDA from continuing operations for Specialty Petrochemicals in the first half of 2021 increased 7.3% to $12.3 million, compared to $11.5 million for the same period in 2020.

Dollar amounts in thousands/rounding may apply	SIX MONTHS ENDED
	JUNE 30 ,
	2021	2020	% Change
Product sales	$102,421	$81,622	26%
Processing fees	2,781	2,403	16%
Gross revenues	$105,202	$84,025	25%
Operating profit before depreciation and amortization	12,312	11,464	7%
Operating profit	6,724	6,226	8%
Net profit before taxes	6,412	4,590	40%
Depreciation and amortization	5,589	5,238	7%
Adjusted EBITDA from continuing operations	12,307	11,471	7%
Capital expenditures	7,259	6,983	4%

Specialty Waxes

Specialty Waxes net loss of $2.1 million in the first half of 2021 compared to net income of $0.9 million for the same period in 2020. Specialty Waxes had revenues of $18.2 million in the first half of 2021, a 2.6% decrease from the same period of 2020. Revenues included $13.8 million of wax product sales and $4.4 million of processing revenues. Wax sales volumes in the first half of 2021 decreased approximately 4.9% from the same period in 2020. In the first half of 2021, the Texas freeze event impacted both wax production and the custom processing business. Adjusted EBITDA from continuing operations for Specialty Waxes in the first half of 2021 was $0.9 million, compared to $2.0 million for the same period in 2020.

Dollar amounts in thousands/rounding may apply	SIX MONTHS ENDED
	JUNE 30 ,
	2021	2020	% Change
Product sales	$13,804	$12,268	13%
Processing fees	4,428	6,448	(31%)
Gross revenues	$18,232	$18,716	(3%)
Operating profit before depreciation and amortization	840	1,920	(56%)
Operating loss	(2,155)	(747)	(189%)
Net loss before taxes	(2,138)	(687)	(211%)
Depreciation and amortization	2,994	2,666	12%
Adjusted EBITDA from continuing operations	857	1,996	(57%)
Capital expenditures	1,405	601	134%

Outlook

“In the second quarter we saw a very strong resurgence of demand due both to the continued recovery from the pandemic and the pent-up demand as a result of the Texas freeze event in February. The demand improvement allowed us to realize price increases across our entire product offering. Some of these benefits were muted by supply chain disruptions both with our suppliers and service providers. While some issues remain, we took positive steps to mitigate impacts to our customers by expanding our owned trucking fleet and extending our third party trucking network.

“Demand in the third quarter remains strong reflecting the general economy and likely some inventory building in the supply chain as our customers deal with their own supply chain issues. We also continue to advance our organic growth program with two new commercial trials expected in the quarter. Benefits from restructuring acitivies in our South Hampton product handling function will reduce our costs in the second half of the year. Continued increases in the price of natural gasoline are also impacting margins on our market-based prime products.

“The second quarter was one of major progress at Trecora and we continue to believe that with an improving economic environment, increasing levels of vaccinations, and activity levels increasing in our end-markets, we expect to drive sustainable profitability in the quarters to come. The improvements that we have made in our company make us very confident about our progress and outlook for the second half of 2021,” concluded Mr. Quarles.

Earnings Call

Tomorrow’s conference call, on August 5, 2021 at 10:00 am Eastern Time, will be simulcast live on the Internet, and can be accessed on the investor relations section of the Company’s website at http://www.trecora.com/ or at https://edge.media-server.com/mmc/p/zcza6anf. A replay of the call will also be available through the same link until October 5, 2021.

To participate via telephone, callers should dial in at least ten to fifteen minutes prior to the 10:00 am Eastern Time start; domestic callers (U.S. and Canada) should call +1-866-417-5724 or +1-409-217-8234 if calling internationally, using the conference ID 9462308. To listen to the playback, please call 1-855-859-2056 if calling within the United States or 1-404-537-3406 if calling internationally. Use pin number 9462308 for the replay.

Use of Non-GAAP Measures

This earnings press release includes non-GAAP financial measures of EBITDA from continuing operations and Adjusted EBITDA from continuing operations and provide reconciliations from our most directly comparable GAAP financial measures to those measures.

We believe these financial measures provide users of our financial statements with supplemental information that may be useful in evaluating our operating performance. We also believe that such non-GAAP measures, when read in conjunction with our operating results presented under GAAP, can be used to better assess our performance from period to period and relative to performance of other companies in our industry, without regard to financing methods, historical cost basis or capital structure. These measures are not measures of financial performance or liquidity under GAAP and should be considered in addition to, and not as a substitute for, analysis of our results under GAAP.

We define EBITDA from continuing operations as net income (loss) from continuing operations plus interest expense, income tax expense (benefit), and depreciation and amortization. We define Adjusted EBITDA from continuing operations as EBITDA from continuing operations plus share-based compensation and plus or minus gains or losses on disposal of assets.

Forward-Looking Statements

Some of the statements and information contained in this earnings press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements regarding the Company’s financial position, business strategy and plans and objectives of the Company’s management for future operations and other statements that are not historical facts, are forward-looking statements. Forward-looking statements are often characterized by the use of words such as “outlook,” “may,” “will,” “can,” “shall,” “should,” “could,” “expects,” “plans,” “anticipates,” “contemplates,” “proposes,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “continue,” “intend,” or the negative of such terms and other comparable terminology, or by discussions of strategy, plans or intentions.

Forward-looking statements involve known and unknown risks, uncertainties, assumptions, and other important factors that could cause the actual results, performance or our achievements, or industry results, to differ materially from historical results, any future results, or performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and factors include, but are not limited to the impacts of the COVID-19 pandemic on our business, financial results and financial condition and that of our customers, suppliers, and other counterparties; general economic and financial conditions domestically and internationally; insufficient cash flows from operating activities; our ability to attract and retain key employees; feedstock and product prices; feedstock availability and our ability to access third party transportation; competition; industry cycles; natural disasters or other severe weather events (such as the Texas freeze event), health epidemics and pandemics (including the COVID-19 pandemic) and terrorist attacks; our ability to consummate extraordinary transactions, including acquisitions and dispositions, and realize the financial and strategic goals of such transactions; technological developments and our ability to maintain, expand and upgrade our facilities; regulatory changes; environmental matters; lawsuits; outstanding debt and other financial and legal obligations (including having to return the amounts borrowed under the PPP Loans or failing to qualify for forgiveness of such loans, in whole or in part); difficulties in obtaining additional financing on favorable conditions, or at all; local business risks in foreign countries, including civil unrest and military or political conflict, local regulatory and legal environments and foreign currency fluctuations; and other risks detailed in our latest Annual Report on Form 10-K, including, but not limited to, “Part I, Item 1A. Risk Factors” and “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” therein, and in our other filings with the Securities and Exchange Commission (the “SEC”). Many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the COVID-19 pandemic and other natural disasters such as severe weather events.

There may be other factors of which we are currently unaware or deem immaterial that may cause our actual results to differ materially from the forward-looking statements. In addition, to the extent any inconsistency or conflict exists between the information included in this release and the information included in our prior releases, reports and other filings with the SEC, the information contained in this release updates and supersedes such information.

Forward-looking statements are based on current plans, estimates, assumptions and projections, and, therefore, you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events.

About Trecora Resources (TREC)

TREC owns and operates a specialty petrochemicals facility specializing in high purity hydrocarbons and other petrochemical manufacturing and a specialty wax facility, both located in Texas, and provides custom processing services at both facilities.

Investor Relations Contact: The Equity Group Inc.

Fred Buonocore, CFA	(212) 836-9607
[email protected]

Mike Gaudreau	(212) 836-9620
[email protected]

TRECORA RESOURCES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2021	December 31, 2020
ASSETS	(thousands of dollars, except par value)
Current Assets
Cash	$ 39,125	$ 55,664
Trade receivables, net	34,210	25,301
Inventories	15,640	12,945
Prepaid expenses and other assets	5,094	9,198
Taxes receivable	286	2,788
Total current assets	94,355	105,896

Plant, pipeline and equipment, net	188,109	187,104

Intangible assets, net	11,972	12,893
Lease right-of-use assets, net	8,962	10,528
Mineral properties	412	412

TOTAL ASSETS	$ 303,810	$ 316,833
LIABILITIES
Current Liabilities
Accounts payable	$ 11,488	$ 14,447
Accrued liabilities	7,388	6,857
Current portion of long-term debt	4,194	4,194
Current portion of lease liabilities	3,244	3,195
Current portion of CARES Act, PPP Loans	6,123	–
Current portion of other liabilities	569	891
Total current liabilities	33,006	29,584

CARES Act, PPP Loans, net of current portion	–	6,123
Long-term debt, net of current portion	39,804	41,901
Post-retirement benefit, net of current portion	316	320
Lease liablities, net of current portion	5,718	7,333
Other liabilities, net of current portion	626	648
Deferred income taxes	26,241	26,517
Total liabilities	105,711	112,426

EQUITY
Common stock – authorized 40 million shares of $0.10 par value; issued 24.4 million and 24.8 million and outstanding 23.8 million and 24.8 million in 2021 and 2020, respectively	2,497	2,483
Additional paid-in capital	62,138	61,311
Treasury stock, at cost (0.6 million shares)	(5,000)	–
Retained earnings	138,175	140,324
Total Trecora Resources Stockholders’ Equity	197,810	204,118
Noncontrolling Interest	289	289
Total equity	198,099	204,407

TOTAL LIABILITIES AND EQUITY	$ 303,810	$ 316,833

TRECORA RESOURCES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

	THREE MONTHS ENDED		SIX MONTHS ENDED
	JUNE 30,		JUNE 30,
	*(unaudited)*		*(unaudited)*
	2021	2020	2021	2020
	(thousands of dollars, except per share amounts)
Revenues
Product sales	$ 64,660	$ 36,707	$ 116,225	$ 93,890
Processing fees	4,189	3,967	7,209	8,851
	68,849	40,674	123,434	102,741
Operating costs and expenses
Cost of sales and processing (including depreciation and amortization of $4,082, $3,750, $8,137 and $7,486, respectively)	57,828	34,507	110,068	88,496
Gross Profit	11,021	6,167	13,366	14,245

General and Administrative Expenses
General and administrative	7,673	6,289	15,005	12,963
Depreciation	226	212	452	428
	7,899	6,501	15,457	13,391

Operating income (loss)	3,122	(334)	(2,091)	854

Other income (expense)
Interest expense	(297)	(735)	(599)	(1,651)
Miscellaneous income, net	133	68	243	6
	(164)	(667)	(356)	(1,645)

Income (loss) from continuing operations before income taxes	2,958	(1,001)	(2,447)	(791)

Income tax (expense) benefit	(703)	(858)	298	4,795

Income (loss) from continuing operations	2,255	(1,859)	(2,149)	4,004

Income (loss) from discontinued operations, net of tax	–	(2)	–	4,855

Net income (loss)	$ 2,255	$ (1,861)	$ (2,149)	$ 8,859

Basic earnings (loss) per common share
Net income (loss) from continuing operations (dollars)	$ 0.09	$ (0.07)	$ (0.09)	$ 0.16
Net income from discontinued operations, net of tax (dollars)	–	–	–	0.20
Net income (loss) (dollars)	$ 0.09	$ (0.07)	$ (0.09)	$ 0.36

Basic weighted average number of common shares outstanding	24,485	24,802	24,673	24,784

Diluted earnings (loss) per common share
Net income (loss) from continuing operations (dollars)	$ 0.09	$ (0.07)	$ (0.09)	$ 0.16
Net income from discontinued operations, net of tax (dollars)	–	–	–	0.19
Net income (loss) (dollars)	$ 0.09	$ (0.07)	$ (0.09)	$ 0.35

Diluted weighted average number of common shares outstanding	25,097	24,802	24,673	25,327

TRECORA RESOURCES AND SUBSIDIARIES

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES

EBITDA from continuing operations and Adjusted EBITDA from continuing operations

(thousands of dollars; rounding may apply)

	THREE MONTHS ENDED				THREE MONTHS ENDED
	6/30/2021				6/30/2020
	SPEC. PETRO	SPEC. WAX	CORP	TREC	SPEC. PETRO	SPEC. WAX	CORP	TREC
NET INCOME (LOSS)	$ 5,286	$ (183)	$ (2,848)	$ 2,255	$ 1,393	$ (332)	$(2,922)	$(1,861)
Income from discontinued operations, net of tax	–	–	–	–	–	–	(2)	(2)
Income (Loss) from continuing operations *	$ 5,286	$ (183)	$ (2,848)	$ 2,255	$ 1,393	$ (332)	$(2,920)	$(1,859)
Interest expense	297	–	–	297	736	–	(1)	735
Income tax expense (benefit)	1,406	–	(703)	703	255	(113)	716	858
Depreciation and amortization	200	23	3	226	185	23	4	212
Depreciation and amortization in cost of sales	2,586	1,496	–	4,082	2,436	1,314	–	3,750
EBITDA from continuing operations *	9,775	1,336	(3,548)	7,563	5,005	892	(2,201)	3,696
Stock-based compensation	–	–	552	552	–	–	543	543
Gain on disposal of assets	(38)	–	–	(38)	(7)	–	–	(7)
Adjusted EBITDA from continuing operations *	$ 9,737	$ 1,336	$ (2,996)	$ 8,077	$ 4,998	$ 892	$(1,658)	$ 4,232


	SIX MONTHS ENDED				SIX MONTHS ENDED
	6/30/2021				6/30/2020
	SPEC. PETRO	SPEC. WAX	CORP	TREC	SPEC. PETRO	SPEC. WAX	CORP	TREC
NET INCOME (LOSS)	$ 5,491	$ (2,137)	$ (5,503)	$(2,149)	$ 5,989	$ 882	$ 1,988	$ 8,859
Income from discontinued operations, net of tax	–	–	–	–	–	–	4,855	4,855
Income (Loss) from continuing operations *	$ 5,491	$ (2,137)	$ (5,503)	$(2,149)	$ 5,989	$ 882	$(2,867)	$ 4,004
Interest expense	599	–	–	599	1,651	–	–	1,651
Income tax expense (benefit)	920	–	(1,218)	(298)	(1,399)	(1,569)	(1,827)	(4,795)
Depreciation and amortization	400	46	6	452	371	47	10	428
Depreciation and amortization in cost of sales	5,189	2,948	–	8,137	4,867	2,619	–	7,486
EBITDA from continuing operations *	12,599	857	(6,715)	6,741	11,479	1,979	(4,684)	8,774
Share based compensation	–	–	1,123	1,123	–	–	933	933
(Gain) Loss on disposal of assets	(292)	–	–	(292)	(8)	17	–	9
Adjusted EBITDA from continuing operations *	$ 12,307	$ 857	$ (5,592)	$ 7,572	$ 11,471	$ 1,996	$(3,751)	$ 9,716

* Discontinued Operations only applicable within the Corporate segment

__________
¹ Based on 25.1 million shares outstanding.
² Based on 24.8 million shares outstanding.
³ Based on 24.7 million shares outstanding.
⁴ Based on 25.3 million shares outstanding.

View original content to download multimedia:https://www.prnewswire.com/news-releases/trecora-resources-announces-second-quarter-2021-results-301348660.html

SOURCE Trecora Resources

August 4, 2021 4:20 pm

American Finance Trust Announces Second Quarter 2021 Results

Company to Host Investor Conference Call at 11:00 AM ET Tomorrow

PR Newswire

NEW YORK, Aug. 4, 2021 /PRNewswire/ — American Finance Trust, Inc. (Nasdaq: AFIN) (“AFIN” or the “Company”), a real estate investment trust focused on acquiring and managing a diversified portfolio of primarily service-oriented and traditional retail and distribution related commercial real estate properties in the U.S., announced today its financial and operating results for the second quarter ended June 30, 2021.

Second Quarter 2021 and Subsequent Event Highlights

Revenue grew 8.9% to $81.6 million from $74.9 million for the second quarter 2020
Net loss attributable to common stockholders was $7.4 million as compared to $21.8 million for the second quarter 2020
Cash net operating income (“NOI”) grew 19.7% to $65.4 million from $54.7 million for the second quarter 2020
Funds from Operations (“FFO”) of $25.1 million, or $0.23 per diluted share increased from $22.2 million, or $0.21 per diluted share, for the second quarter 2020
Adjusted Funds from Operations (“AFFO”) grew 35.4% to $28.7 million or $0.26 per share from $21.2 million, or $0.20 per diluted share, in the prior year second quarter
Dividends of $23.1 million or $0.21 per share
Improved Net Debt to adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) to 7.4x from 8.7x in the same prior year quarter and 8.3x last quarter¹
Enhanced balance sheet, with weighted average interest rate of 3.7%, compared to 3.8%, weighted-average debt maturity of 5.3 years up from 3.3 years and 91.4% of debt fixed-rate versus 72.3% a year ago
Completed issuance of $240 million investment-grade rated ABS notes with a 2.9% weighted-average interest rate and 9.0 year term²
Collected approximately 100% of original cash rent in second quarter 2021, including 100% in single tenant portfolio, 100% in the multi-tenant portfolio, and 100% among the top 20 tenants^3,4
Multi-tenant Executed Occupancy⁵ and Leasing Pipeline⁶ are expected to add $2.7 million of annualized straight-line rent and 174,000 square feet to the portfolio over time as executed leases commence
Executed Occupancy and Leasing Pipeline are expected to increase multi-tenant occupancy to 89.1% over time, exceeding Executed Occupancy of 86.2% reported as of June 30, 2020, assuming no other changes
Total year-to-date closed and pipeline acquisitions of $196.7 million⁷ with a cash capitalization rate⁸ of 7.6% and a weighted average capitalization rate⁹ of 8.4%
High quality portfolio with 61% of tenants in single-tenant portfolio¹⁰ and 70% of the top 20 tenants portfolio-wide rated as investment grade or implied investment grade¹¹
Annual rent escalators¹² with a weighted-average of 1.2% per year provide contractually embedded rent growth

“Our Second Quarter results highlight the strength, predictability and performance of our best-in-class service-retail oriented portfolio and the result of our focus on constructing an investment-grade balance sheet,” said Michael Weil, CEO of AFIN. “Strong leasing activity in the multi-tenant portfolio contributed to a 35% increase in AFFO over last year and has driven executed occupancy to 89% in our shopping centers. We also continue to de-risk our balance sheet using all the tools at our disposal, such as the asset-backed securities we issued during the quarter and the implementation of an initiative to reduce Net Debt to Adjusted EBITDA, which improved to 7.4x this quarter from 8.3x last quarter.”

Financial Results

	Three Months Ended June 30,
(In thousands, except per share data)	2021		2020
Revenue from tenants	$	81,577	$	74,934

Net loss attributable to common stockholders	$	(7,405)	$	(21,803)
Net loss per common share ^(a)	$	(0.07)	$	(0.20)

FFO attributable to common stockholders	$	25,053	$	22,233
FFO per common share ^(a)	$	0.23	$	0.21

AFFO attributable to common stockholders	$	28,689	$	21,194
AFFO per common share ^(a)	$	0.26	$	0.20


(a)	All per share data based on 110,898,056 and 108,386,013 diluted weighted-average shares outstanding for the three months ended June 30, 2021 and 2020, respectively.

Real Estate Portfolio

The Company’s portfolio consisted of 939 net lease properties located in 46 states and the District of Columbia and comprised 19.9 million rentable square feet as of June 30, 2021. Portfolio metrics include:

94.9% leased¹¹, with 8.5 years remaining weighted-average lease term¹³
76.8% of leases have weighted-average contractual rent increases of 1.3% based on annualized straight-line rent
61% of single-tenant portfolio and 31% of multi-tenant anchor tenants annualized straight-line rent derived from investment grade or implied investment grade tenants
80% retail properties, 11% distribution properties and 9% office properties (based on an annualized straight-line rent)
71% of the retail portfolio focused on either service¹⁴or experiential retail¹⁵giving the Company strong alignment with “e-commerce resistant” real estate

Property Acquisitions

During the three months ended June 30, 2021, the Company acquired 17 properties for an aggregate contract purchase price of $26.4 million at a weighted average capitalization rate of 7.1%.

Capital Structure and Liquidity Resources

As of June 30, 2021 the Company had a total borrowing capacity under the credit facility of $408.3 million based on the value of the borrowing base under the credit facility, and, of this amount, $155.7 million was outstanding under the credit facility as of June 30, 2021 and $252.6 million remained available for future borrowings. As of June 30, 2021, the Company had $137.1 million of cash and cash equivalents. The Company’s net debt¹⁶ to gross asset value¹⁷ was 38.4%, with net debt of $1.7 billion.

The Company’s percentage of fixed rate debt was 91.4% as of June 30, 2021. The Company’s total combined debt had a weighted-average interest rate cost of 3.7%¹⁸, resulting in an interest coverage ratio of 3.1 times¹⁹.

Rent Collection Update

Second Quarter of 2021

For the second quarter of 2021, AFIN collected approximately 100% of the original cash rents that were due across the portfolio, including 100% of the original cash rent payable from the top 20 tenants in the portfolio (based on the total of second quarter original cash rent due across our portfolio) and 100% of the original cash rent payable in the single tenant portfolio and 100% of the original cash rent payable in the multi-tenant portfolio. Cash rent collected includes both contractual rents and deferred rents paid during the period^3.

Footnotes/Definitions

¹	Represents ratio of net debt as of a particular date, to the Company’s calculation of its Adjusted EBITDA multiplied by four for the three months ended on that date. For the second quarter 2021, net debt represents total debt of $1.8 billion less cash and cash equivalents of $137.1 million as of June 30, 2021. For first quarter 2021, net debt represents total debt of $1.8 billion less cash and cash equivalents of $84.2 million as of March 31, 2021. For the second quarter 2020, net debt represents total debt of $1.8 billion less cash and cash equivalents of $136.7 million as of June 30, 2020.
²	Excludes Class B-1 (BBB) Notes and Class B-2 (BBB) Notes issued in the same transaction that were retained by the Company’s operating partnership but may be sold to unaffiliated third parties in the future. Class B-1 (BBB) Notes have a $30 million principal amount, an anticipated term of seven years and an interest rate of 4.02%. Class B-2 (BBB) Notes have a $48 million principal amount, an anticipated term of term years and an interest rate of 4.58%.
³	We calculate “original cash rent collections” by comparing original cash rent due under our lease agreements to the total amount of rent collected during the period, which includes both original cash rent due and payments of amounts deferred from prior periods. Eliminating the impact of deferred rent paid, we collected 99% of original cash rent due in the single-tenant portfolio, 97% of original cash rent due in the multi-tenant portfolio, 99% of original cash rent due in the total portfolio. Top 20 tenants based on second quarter 2021 original cash rent due. This information may not be indicative of future periods.
⁴	The impact of the COVID-19 pandemic on the Company’s future results of operations and liquidity will depend on the overall length and severity of the COVID-19 pandemic, which management is unable to predict.
⁵	Includes occupancy, measured by the percentage of square footage of which the tenant has taken possession of divided by the respective total rentable square feet, as of a particular date as well as all leases fully executed by both parties as of the same date where the tenant has yet to take possession as of such date. For the second quarter of 2021 and as of July 15, 2021, there are 10 additional leases executed where rent commences over time between the third quarter of 2021 and the first quarter of 2022 totaling approximately 102,000 square feet. For the fourth quarter of 2020 and as of January 31, 2021, there were four additional leases executed where rent commences over time between the first quarter of 2021 and the third quarter of 2021 totaling approximately 34,000 square feet.
⁶	For the second quarter of 2021, includes (i) all leases fully executed by both parties as of July 31, 2021, but after June 30, 2021 and (ii) all leases under negotiation with an executed letter of intent (“LOI”) by both parties as of July 31, 2021. This represents three executed leases totaling approximately 24,000 square feet and nine LOIs totaling approximately 48,000 square feet. No lease terminations occurred during this period. There can be no assurance that LOIs will lead to definitive leases that will commence on their current terms, or at all. Leasing pipeline should not be considered an indication of future performance. For the fourth quarter of 2020, includes (i) all leases fully executed by both parties as of January 31, 2021, but after December 31, 2020 and (ii) all leases under negotiation with an executed LOI by both parties as of January 31, 2021. This represents six new leases totaling approximately 220,000 square feet, net of one lease termination for 5,000 square feet during this period.
⁷	Represents the contract purchase price and excludes acquisition costs which are capitalized per GAAP. For the six months ended June 30, 2021, capitalized acquisition costs were approximately $0.8 million. Includes acquisitions closed during the third quarter of 2021 with an aggregate contract purchase price of $56.5 million and pending acquisitions subject to definitive purchase and sale agreements with an aggregate contract purchase price of $76.9 million. These pending acquisitions are subject to conditions and may not be completed on the contemplated terms or at all.
⁸	Cash capitalization rate is a rate of return on a real estate investment property based on the expected, annualized cash rental income during the first year of ownership that the property will generate under its existing lease or leases. Cash capitalization rate is calculated by dividing this annualized cash rental income the property will generate (before debt service and depreciation and after fixed costs and variable costs) by the purchase price of the property. excluding acquisition costs. The weighted-average cash capitalization rate is based upon square feet.
⁹	Capitalization rate is a rate of return on a real estate investment property based on the expected, annualized straight-line rental income that the property will generate under its existing lease or leases. Capitalization rate is calculated by dividing the annualized straight-lined rental income the property will generate (before debt service and depreciation and after fixed costs and variable costs) by the purchase price of the property, excluding acquisition costs. The weighted-average capitalization rate is based upon square feet.
¹⁰	Percentage of single-tenant portfolio tenants based on annualized straight-line rent as of June 30, 2021.
¹¹	As used herein, investment grade includes both actual investment grade ratings of the tenant or guarantor, if available, or implied investment grade. Implied investment grade may include actual ratings of tenant parent, guarantor parent (regardless of whether or not the parent has guaranteed the tenant’s obligation under the lease) or by using a proprietary Moody’s analytical tool, which generates an implied rating by measuring a company’s probability of default. The term “parent” for these purposes includes any entity, including any governmental entity, owning more than 50% of the voting stock in a tenant. Ratings information is as of June 30, 2021. Based on annualized straight-line rent as of June 30, 2021, single-tenant portfolio tenants are 49.6% actual investment grade rated and 11.3% implied investment grade rated, top 20 tenants are 61% actual investment-grade rated and 9% implied investment-grade rated and anchor tenants in the multi-tenant portfolio are 20.5% actual investment grade rated and 10.7% implied investment grade rated. At the beginning of the third quarter of 2021, the Company’s lease with United Healthcare expired and was not renewed, representing 400,000 square feet and $5.3 million of annualized straight-line rent. Giving effect to this lease expiration, single-tenant portfolio tenants would have been 47% actual investment grade rated and 11% implied investment grade rated, top 20 tenants would have been 58% actual investment grade rated and 9% implied investment grade rated.
¹²	Contractual rent increases include fixed percent or actual increases, or CPI-indexed increases.
¹³	The weighted-average is based on annualized straight-line rent as of June 30, 2021.
¹⁴	Service retail is defined as single-tenant retail properties leased to tenants in the retail banking, restaurant, grocery, pharmacy, gas/convenience, healthcare, and auto services sectors
¹⁵	Experiential retail is defined as multi-tenant properties leased to tenants in the restaurant, discount retail, entertainment, salon/beauty, and grocery sectors, among others. The Company also refers to experiential retail as e-commerce defensive retail.
¹⁶	Total debt of $1.8 billion less cash and cash equivalents of $137.1 million as of June 30, 2021. Excludes the effect of deferred financing costs, net, mortgage premiums, net and includes the effect of cash and cash equivalents.
¹⁷	Defined as the carrying value of total assets plus accumulated depreciation and amortization as of June 30, 2021.
¹⁸	Weighted based on the outstanding principal balance of the debt.
¹⁹	The interest coverage ratio is calculated by dividing Adjusted EBITDA by cash paid for interest (interest expense less amortization of deferred financing costs, net, and change in accrued interest and amortization of mortgage premiums on borrowings) for the quarter ended June 30, 2021.

Webcast and Conference Call

AFIN will host a webcast and call on August 5, 2021 at 11:00 a.m. ET to discuss its financial and operating results. This webcast will be broadcast live over the Internet and can be accessed by all interested parties through the AFIN website, www.americanfinancetrust.com, in the “Investor Relations” section.

Dial-in instructions for the conference call and the replay are outlined below.

To listen to the live call, please go to AFIN’s “Investor Relations” section of the website at least 15 minutes prior to the start of the call to register and download any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the AFIN website at www.americanfinancetrust.com.

Live Call

Dial-In (Toll Free): 1-877-407-0792
International Dial-In: 1-201-689-8263

Conference Replay*

Domestic Dial-In (Toll Free): 1-844-512-2921
International Dial-In: 1-412-317-6671
Conference Number: 13720917
*Available from 2:00 p.m. ET on August 5, 2021 through November 5, 2021.

About American Finance Trust, Inc.

American Finance Trust, Inc. (Nasdaq: AFIN) is a publicly traded real estate investment trust listed on the Nasdaq focused on acquiring and managing a diversified portfolio of primarily service-oriented and traditional retail and distribution related commercial real estate properties in the U.S. Additional information about AFIN can be found on its website at www.americanfinancetrust.com.

Supplemental Schedules

The Company will file supplemental information packages with the Securities and Exchange Commission (the “SEC”) to provide additional disclosure and financial information. Once posted, the supplemental package can be found under the “Presentations” tab in the Investor Relations section of AFIN’s website at www.americanfinancetrust.com and on the SEC website at www.sec.gov.

Important Notice

The statements in this press release that are not historical facts may be forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to be materially different. The words “anticipates,” “believes,” “expects,” “estimates,” “projects,” “plans,” “intends,” “may,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company’s control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties include the potential adverse effects of the ongoing global COVID-19 pandemic, including actions taken to contain or treat COVID-19, on the Company, the Company’s tenants and the global economy and financial markets and that any potential future acquisition is subject to market conditions and capital availability and may not be identified or completed on favorable terms, or at all, as well as those risks and uncertainties set forth in the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed on February 25, 2021 and all other filings with the SEC after that date, as such risks, uncertainties and other important factors may be updated from time to time in the Company’s subsequent reports. Further, forward looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise any forward-looking statement to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results, unless required to do so by law.

Accounting Treatment of Rent Deferrals/Abatements

The majority of the concessions granted to the Company’s tenants as a result of the COVID-19 pandemic are rent deferrals or temporary rent abatements with the original lease term unchanged and collection of deferred rent deemed probable. The Company’s revenue recognition policy requires that it must be probable that the Company will collect virtually all of the lease payments due and does not provide for partial reserves, or the ability to assume partial recovery. In light of the COVID-19 pandemic, the FASB and SEC agreed that for leases where the total lease cash flows will remain substantially the same or less than those after the COVID-19 related effects, companies may choose to forgo the evaluation of the enforceable rights and obligations of the original lease contract as a practical expedient and account for rent concessions as if they were part of the enforceable rights and obligations of the parties under the existing lease contract. As a result, rental revenue used to calculate Net Income and NAREIT FFO has not been, and the Company does not expect it to be, significantly impacted by these types of deferrals. In addition, since the Company currently believes that these deferral amounts are collectable, they have been excluded from the increase in straight-line rent for AFFO purposes the amounts recognized under GAAP relating to these types of rent deferrals. Conversely, for abatements where contractual rent has been reduced, the reduction in revenue is reflected over the remaining lease term for accounting purposes but represents a permanent reduction in revenue and the Company has, accordingly, reduced its AFFO.

Contacts:

Investors and Media:
Email: [email protected]
Phone: (866) 902-0063

American Finance Trust, Inc.
Consolidated Balance Sheets
(In thousands. except share and per share data)

	June 30, 2021		December 31, 2020
	(Unaudited)
ASSETS
Real estate investments, at cost:
Land	$	735,242	$	723,316
Buildings, fixtures and improvements	2,881,710		2,830,508
Acquired intangible lease assets	454,323		454,245
Total real estate investments, at cost	4,071,275		4,008,069
Less: accumulated depreciation and amortization	(695,719)		(639,367)
Total real estate investments, net	3,375,556		3,368,702
Cash and cash equivalents	137,138		102,860
Restricted cash	14,816		10,537
Deposits for real estate acquisitions	2,983		137
Derivative assets, at fair vale	1,930		—
Deferred costs, net	17,487		16,663
Straight-line rent receivable	70,208		66,581
Operating lease right-of-use assets	18,299		18,546
Prepaid expenses and other assets (including $2,089 and $1,939 due from related parties as of June 30, 2021 and December 31, 2020, respectively)	28,070		23,941
Assets held for sale	1,439		—
Total assets	$	3,667,926	$	3,607,967

LIABILITIES AND STOCKHOLDERS’ EQUITY
Mortgage notes payable, net	$	1,615,054	$	1,490,798
Credit facility	155,742		280,857
Below market lease liabilities, net	80,971		78,674
Accounts payable and accrued expenses (including $1,252 and $273 due to related parties as of June 30, 2021 and December 31, 2020, respectively)	31,118		25,210
Operating lease liabilities	19,214		19,237
Derivative liabilities, at fair value	—		123
Deferred rent and other liabilities	10,025		9,794
Dividends payable	5,836		3,675
Total liabilities	1,917,960		1,908,368

7.50% Series A cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 12,796,000 and 8,796,000 shares authorized, 7,933,711 and 7,842,008 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively	79		79
7.375% Series C cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 11,536,000 and 3,680,000 shares authorized, 4,594,498 and 3,535,700 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively	46		35
Common stock, $0.01 par value per share, 300,000,000 shares authorized, 117,706,586 and 108,837,209 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively	1,177		1,088
Additional paid-in capital	2,829,490		2,723,678
Accumulated other comprehensive income (loss)	1,930		(123)
Distributions in excess of accumulated earnings	(1,119,182)		(1,055,680)
Total stockholders’ equity	1,713,540		1,669,077
Non-controlling interests	36,426		30,522
Total equity	1,749,966		1,699,599
Total liabilities and equity	$	3,667,926	$	3,607,967

American Finance Trust, Inc.
Consolidated Statements of Operations (Unaudited)
(In thousands, except share and per share data)

	Three Months Ended June 30,
	2021		2020
Revenue from tenants	$	81,577	$	74,934

Operating expenses:
Asset management fees to related party	7,922		6,918
Property operating expense	13,329		12,541
Impairment of real estate investments	91		11,502
Acquisition, transaction and other costs ^[1]	136		721
Equity-based compensation ^[2]	5,283		3,247
General and administrative	3,540		6,864
Depreciation and amortization	32,428		35,443
Total operating expenses	62,729		77,236
Operating income before gain on sale of real estate investments	18,848		(2,302)
Gain on sale of real estate investments	11		2,838
Operating income	18,859		536
Other (expense) income:
Interest expense	(20,361)		(18,801)
Other income	20		61
Loss on non-designated derivative	—		—
Total other expense, net	(20,341)		(18,740)
Net loss	(1,482)		(18,204)
Net loss attributable to non-controlling interests	2		20
Allocation for preferred stock	(5,925)		(3,619)
Net loss attributable to common stockholders	$	(7,405)	$	(21,803)

Basic and Diluted Net Loss Per Share:
Net loss per share attributable to common stockholders — Basic and Diluted	$	(0.07)	$	(0.20)
Weighted-average shares outstanding — Basic and Diluted	110,898,056		108,386,013
Weighted-average shares outstanding — Diluted	110,898,056		108,386,013


[1]	For the three months ended June 30, 2020, includes litigation costs related to AFIN’s 2017 merger with American Realty Capital – Retail Centers of America, Inc. (the “Merger”) of $0.3 million. Litigation costs related to the Merger incurred in the three months ended June 30, 2021 were not significant.
[2]	For the three months ended June 30, 2021 and 2020, includes expense related to the Company’s restricted common shares of $0.4 million and $0.3 million, respectively.

American Finance Trust, Inc.
Quarterly Reconciliation of Non-GAAP Measures (Unaudited)
(In thousands)

	Three Months Ended June 30,				Three Months Ended March 31,
	2021		2020		2021
Adjusted EBITDA
Net loss	$	(1,482)	$	(18,204)	$	(3,754)
Depreciation and amortization	32,428		35,443		32,319
Interest expense	20,361		18,801		19,334
Impairment of real estate investments	91		11,502		—
Acquisition, transaction and other costs ^[1]	136		721		42
Equity-based compensation ^[2]	5,283		3,247		4,347
Gain on sale of real estate investments	(11)		(2,838)		(286)
Other income	(20)		(61)		(24)
Loss on non-designated derivatives	—		—		—
Adjusted EBITDA	56,786		48,611		51,978
Asset management fees to related party	7,922		6,918		7,321
General and administrative	3,540		6,864		6,449
NOI	68,248		62,393		65,748
Amortization of market lease and other intangibles, net	(1,041)		(2,289)		(935)
Straight-line rent	(1,759)		(5,442)		(1,727)
Cash NOI	$	65,448	$	54,662	$	63,086

Cash Paid for Interest:
Interest expense	$	20,361	$	18,801	19,334
Amortization of deferred financing costs, net and change in accrued interest	(2,361)		(990)		(2,469)
Amortization of mortgage discounts and premiums on borrowings	323		589		321
Total cash paid for interest	$	18,323	$	18,400	17,186


[1]	For the three months ended June 30, 2020 includes litigation costs related to the Merger of $0.3 million. Litigation costs related to the Merger incurred in the three months ended June 30, 2021 were not significant.
[2]	For the three months ended June 30, 2021 and 2020, includes expense related to the Company’s restricted common shares of $0.4 million and $0.3 million, respectively.

American Finance Trust, Inc.
Quarterly Reconciliation of Non-GAAP Measures (Unaudited)
(In thousands)

	Three Months Ended June 30,
	2021		2020
Net loss attributable to common stockholders (in accordance with GAAP)	$	(7,405)	$	(21,803)
Impairment of real estate investments	91		11,502
Depreciation and amortization	32,428		35,443
Gain on sale of real estate investments	(11)		(2,838)
Proportionate share of adjustments for non-controlling interest to arrive at FFO	(50)		(71)
FFO attributable to common stockholders	25,053		22,233
Acquisition, transaction and other costs ^[1]	136		721
Legal fees and expenses — COVID-19 lease disputes^[2]	109		242
Amortization of market lease and other intangibles, net	(1,041)		(2,289)
Straight-line rent	(1,759)		(5,442)
Straight-line rent (rent deferral agreements) ^[3]	(1,124)		2,082
Amortization of mortgage premiums on borrowings	(323)		(589)
Loss on non-designated derivatives	—		—
Equity-based compensation ^[4]	5,283		3,247
Amortization of deferred financing costs, net and change in accrued interest	2,361		990
Proportionate share of adjustments for non-controlling interest to arrive at AFFO	(6)		(1)
AFFO attributable to common stockholders	$	28,689	$	21,194


[1]	Primarily includes prepayment costs incurred in connection with early debt extinguishment as well as litigation costs related to the Merger.
[2]	Reflects legal costs incurred related to disputes with tenants due to store closures or other challenges resulting from COVID-19. The tenants involved in these disputes had not recently defaulted on their rent and, prior to the second and third quarters of 2020, had recently exhibited a pattern of regular payment. Based on the tenants involved in these matters, their history of rent payments, and the impact of the pandemic on current economic conditions, the Company views these costs as COVID-19-related and separable from our ordinary general and administrative expenses related to tenant defaults. The Company engaged counsel in connection with these issues separate and distinct from counsel the Company typically engages for tenant defaults. The amount reflects what the Company believes to be only those incremental legal costs above what the Company typically incurs for tenant-related dispute issues. The Company may continue to incur these COVID-19 related legal costs in the future.
[3]	Represents amounts related to deferred rent pursuant to lease negotiations which qualify for FASB relief for which rent was deferred but not reduced. These amounts are included in the straight-line rent receivable on the Company’s consolidated balance sheet but are considered to be earned revenue attributed to the current period for rent that was deferred for purposes of AFFO as they are expected to be collected. Accordingly, when the deferred amounts are collected, the amounts reduce AFFO. For rent abatements (including those qualified for FASB relief), where contractual rent has been reduced, the reduction in revenue is reflected over the remaining lease term for accounting purposes but represents a permanent reduction in revenue and the Company has, accordingly reduced its AFFO.
[4]	Includes expense related to the amortization of the Company’s restricted common shares and LTIP Units related to its multi-year outperformance agreements for all periods presented.

Non-GAAP Financial Measures

This release discusses the non-GAAP financial measures we use to evaluate our performance, including Funds from Operations (“FFO”), Adjusted Funds from Operations (“AFFO”), Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), Net Operating Income (“NOI”) and Cash Net Operating Income (“Cash NOI”). While NOI is a property-level measure, AFFO is based on our total performance and therefore reflects the impact of other items not specifically associated with NOI such as, interest expense, general and administrative expenses and operating fees to related parties. Additionally, NOI as defined herein, does not reflect an adjustment for straight-line rent but AFFO does. A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income, is provided below. Adjustments for unconsolidated partnerships and joint ventures are calculated to exclude the proportionate share of the non-controlling interest to arrive at FFO, AFFO and NOI attributable to stockholders.

Caution on Use of Non-GAAP Measures

FFO, AFFO, Adjusted EBITDA, NOI and Cash NOI should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP measures.

Other REITs may not define FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, definition (as we do), or may interpret the current NAREIT definition differently than we do, or may calculate AFFO differently than we do. Consequently, our presentation of FFO and AFFO may not be comparable to other similarly titled measures presented by other REITs.

We consider FFO and AFFO useful indicators of our performance. Because FFO and AFFO calculations exclude such factors as depreciation and amortization of real estate assets and gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), FFO and AFFO presentations facilitate comparisons of operating performance between periods and between other REITs in our peer group.

As a result, we believe that the use of FFO and AFFO, together with the required GAAP presentations, provide a more complete understanding of our performance, including relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. However, FFO and AFFO are not indicative of cash available to fund ongoing cash needs, including the ability to pay cash dividends. Investors are cautioned that FFO and AFFO should only be used to assess the sustainability of our operating performance excluding these activities, as they exclude certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred.

Funds from Operations and Adjusted Funds from Operations

Funds from Operations

Due to certain unique operating characteristics of real estate companies, as discussed below, the NAREIT, an industry trade group, has promulgated a performance measure known as FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. FFO is not equivalent to net income or loss as determined under GAAP.

We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper and approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from sales of certain real estate assets, gain and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for consolidated partially-owned entities (including our Operating Partnership) and equity in earnings of unconsolidated affiliates are made to arrive at our proportionate share of FFO attributable to our stockholders. Our FFO calculation complies with NAREIT’s definition.

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, and straight-line amortization of intangibles. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation and certain other items may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, among other things, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.

Adjusted Funds from Operations

In calculating AFFO, we start with FFO, then we exclude certain income or expense items from AFFO that we consider to be more reflective of investing activities, such as non-cash income and expense items and the income and expense effects of other activities that are not a fundamental attribute of our day to day operating business plan, such as amounts related to litigation arising out of the Merger. These amounts include legal costs incurred as a result of the litigation, portions of which have been and may in the future be reimbursed under insurance policies maintained by us. Insurance reimbursements are deducted from AFFO in the period of reimbursement. We believe that excluding the litigation costs and subsequent insurance reimbursements related to litigation arising out of the Merger helps to provide a better understanding of the operating performance of our business. Other income and expense items also include early extinguishment of debt and unrealized gains and losses, which may not ultimately be realized, such as gains or losses on derivative instruments and gains and losses on investments. In addition, by excluding non-cash income and expense items such as amortization of above-market and below-market leases intangibles, amortization of deferred financing costs, straight-line rent, vesting and conversion of the Class B Units and share-based compensation related to restricted shares and the 2018 OPP from AFFO, we believe we provide useful information regarding those income and expense items which have a direct impact on our ongoing operating performance.

In calculating AFFO, we exclude certain expenses which under GAAP are characterized as operating expenses in determining operating net income (loss). All paid and accrued merger, acquisition and transaction related fees and certain other expenses negatively impact our operating performance during the period in which expenses are incurred or properties are acquired will also have negative effects on returns to investors but are not reflective of our on-going performance. In addition, legal fees and expense associated with COVID-19-related lease disputes involving certain tenants negatively impact our operating performance but are not reflective of our on-going performance. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income (loss). In addition, as discussed above, we view gains and losses from fair value adjustments as items which are unrealized and may not ultimately be realized and not reflective of ongoing operations and are therefore typically adjusted for when assessing operating performance. Excluding income and expense items detailed above from our calculation of AFFO provides information consistent with management’s analysis of our operating performance. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such changes that may reflect anticipated and unrealized gains or losses, we believe AFFO provides useful supplemental information. By providing AFFO, we believe we are presenting useful information that can be used to better assess the sustainability of our ongoing operating performance without the impact of transactions or other items that are not related to the ongoing performance of our portfolio of properties. AFFO presented by us may not be comparable to AFFO reported by other REITs that define AFFO differently. Furthermore, we believe that in order to facilitate a clear understanding of our operating results, AFFO should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. AFFO should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or ability to pay dividends.

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, Net Operating Income and Cash Net Operating Income.

We believe that Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization adjusted for acquisition and transaction-related expenses, other non-cash items such as the vesting and conversion of the Class B Units, expense related to our multi-year outperformance agreement with the Advisor and including our pro-rata share from unconsolidated joint ventures, is an appropriate measure of our ability to incur and service debt. Adjusted EBITDA should not be considered as an alternative to cash flows from operating activities, as a measure of our liquidity or as an alternative to net income as an indicator of our operating activities. Other REITs may calculate Adjusted EBITDA differently and our calculation should not be compared to that of other REITs.

NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate. NOI is equal to total revenues, excluding contingent purchase price consideration, less property operating and maintenance expense. NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss). We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unleveraged basis. We use NOI to assess and compare property level performance and to make decisions concerning the operations of the properties. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net income (loss). NOI excludes certain items included in calculating net income (loss) in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or our ability to pay dividends.

Cash NOI, is a non-GAAP financial measure that is intended to reflect the performance of our properties. We define Cash NOI as NOI excluding amortization of above/below market lease intangibles and straight-line adjustments that are included in GAAP lease revenues. We believe that Cash NOI is a helpful measure that both investors and management can use to evaluate the current financial performance of our properties and it allows for comparison of our operating performance between periods and to other REITs. Cash NOI should not be considered as an alternative to net income, as an indication of our financial performance, or to cash flows as a measure of liquidity or our ability to fund all needs. The method by which we calculate and present Cash NOI may not be directly comparable to the way other REITs present Cash NOI.

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SOURCE American Finance Trust, Inc.

August 4, 2021 4:20 pm

Modine Reports First Quarter Fiscal 2022 Results

First quarter performance reflects strong top-line performance driven by continued market improvement and focused execution

PR Newswire

RACINE, Wis., Aug. 4, 2021 /PRNewswire/ — Modine Manufacturing Company (NYSE: MOD), a diversified global leader in thermal management technology and solutions, today reported financial results for the quarter ended June 30, 2021.

First Quarter Highlights:

Net sales of $494.6 million increased 42 percent from the prior year
Operating income of $8.7 million increased $11.9 million
Adjusted EBITDA of $33.3 million increased $12.8 million or 62 percent
Earnings per share of $0.04 and adjusted earnings per share of $0.20

“Our top-line performance in the fiscal first quarter reflects solid gains in all segments,” said Modine President and Chief Executive Officer, Neil D. Brinker. “In addition, our CIS segment delivered a second consecutive quarter of strong revenue growth and improved profitability. Our earnings conversion was somewhat impacted by cost inflation and supply chain disruptions, as we work to offset these pressures through commercial and operational actions. We expect these actions, along with the positive impact of material pass-through pricing adjustments, to have a positive impact for the balance of the year.”

Financial Results

Net sales increased 42 percent in the first quarter to $494.6 million, compared with $347.8 million in the prior year. The increase was primarily driven by market-related volume improvements in all segments as compared to the prior year, which included the significant impact of COVID-19 related plant closures around the world. This increase also included approximately $24 million of favorable currency impacts.

Gross profit increased 59 percent in the first quarter to $73.2 million, and gross margin improved 150 basis points to 14.8 percent, primarily driven by volume improvements in all segments and lower depreciation in the Automotive segment, partially offset by higher material and overhead costs.

Selling, general and administrative (“SG&A”) expenses were $59.4 million in the first quarter, which was $14.7 million or 33 percent higher than the prior year. This increase was primarily driven by higher compensation-related expenses, as the prior year was favorably impacted by cost-saving actions, including furloughs, shortened work weeks and temporary salary reductions, in response to the COVID-19 pandemic. In addition, we recorded $3.5 million of environmental charges during the first quarter of fiscal 2022.

Operating income in the first quarter was $8.7 million, compared to an operating loss of $3.2 million in the prior year. This increase was driven primarily by higher gross profit, partially offset by higher SG&A expenses and a loss on sale of business in the first quarter of fiscal 2022, as compared to the prior year. During the first quarter of fiscal 2022, the Company recorded a $6.6 million loss on the sale of the air-cooled automotive business in Austria and a $1.8 million net reversal of previously-recorded impairment charges primarily relating to the liquid-cooled automotive business. In addition, environmental expenses, automotive exit strategy costs, strategic reorganization costs and restructuring expenses totaled $6.3 million. Excluding these items, as well as depreciation and amortization expense, Adjusted EBITDA of $33.3 million increased $12.8 million, or 62 percent, compared with $20.5 million in the prior year.

Earnings per share was $0.04 in the first quarter, compared with a loss per share of $0.17 in the prior year. Adjusted earnings per share was $0.20 in the first quarter, compared with an adjusted loss per share of $0.09 in the prior year. These increases were primarily due to higher operating earnings compared to the prior year.

First Quarter Segment Review

BHVAC segment sales were $59.9 million, compared with $47.6 million one year ago, an increase of 26 percent. This increase was driven primarily by higher sales of heating products in the U.S. and air conditioning, data center, and ventilation products in the U.K. The segment reported gross margin of 27.1 percent, which was 340 basis points lower than the prior year, primarily due to higher material and labor costs, including the impact of cost saving initiatives taken in the first quarter of fiscal 2021 in response to the COVID-19 pandemic. The segment reported operating income of $6.8 million, a $0.3 million decrease from the prior year, primarily due to higher SG&A expenses. Adjusted EBITDA for the BHVAC segment was $7.7 million, a decrease of $0.2 million from the prior year.
CIS segment sales were $159.2 million, compared with $122.5 million one year ago, an increase of 30 percent. This increase was driven by higher sales to commercial HVAC and refrigeration customers. The segment reported gross margin of 13.0 percent, up 40 basis points compared with the prior year, primarily due to higher sales volumes, partially offset by the negative impact of higher material and overhead costs. The segment reported operating income of $6.4 million, a $6.4 million increase from the prior year, primarily due to higher gross profit on higher sales. Adjusted EBITDA for the CIS segment was $12.6 million, an increase of $4.0 million from the prior year.
HDE segment sales were $201.8 million, compared with $123.5 million one year ago, an increase of 63 percent. This increase was driven by higher sales to all end markets around the world, largely as the result of improved end market demand. The segment reported gross margin of 11.2 percent, up 200 basis points from the prior year. This increase was primarily driven by higher sales volume partially offset by higher material and tariff costs. The segment reported operating income of $8.9 million, an $11.4 million increase compared to an operating loss of $2.5 million in the prior year. This increase was primarily due to higher gross profit on higher sales volume and lower restructuring expenses, partially offset by higher SG&A expenses. Adjusted EBITDA for the HDE segment was $15.4 million, an increase of $9.9 million from the prior year.
Automotive segment sales were $86.2 million, compared with $62.1 million one year ago, an increase of 39 percent. This increase was driven by higher end market demand, primarily in Europe. The segment reported gross margin of 15.3 percent, up 760 basis points compared with the prior year, primarily due to higher sales volume and lower depreciation expense, partially offset by higher material and tariff costs. The segment’s operating income of $4.2 million was up $8.0 million, primarily due to higher gross profit partially offset by higher SG&A expenses as compared to an operating loss of $3.8 million in the prior year. Adjusted EBITDA for the Automotive segment was $2.3 million, an increase of $0.9 million from the prior year.

Balance Sheet & Liquidity

Net cash used for operating activities for the quarter ended June 30, 2021 was $10.1 million, a decrease of $22.4 million compared with the prior year. Free cash flow for the first quarter of fiscal 2022 was a use of $21.5 million, down $24.7 million from the prior year, primarily resulting from higher working capital due to higher revenues and incentive compensation payments made during the quarter. In the first quarter of fiscal 2021, cash flow was unusually strong due the deferral of incentive compensation and other cash payments in an effort to conserve cash. Cash payments for restructuring activities, automotive strategy and separation costs, and strategic reorganization costs during the quarter were $4.8 million.

Total debt was $371.1 million as of June 30, 2021. Cash and cash equivalents at the end of the first quarter were $49.0 million. Net debt was $322.1 million as of June 30, 2021, an increase of $25.4 million from the end of fiscal 2021.

Outlook

“We are maintaining our full-year guidance despite ongoing inflationary pressures and supply chain concerns,” concluded Brinker. “We are keenly focused on our strategic priorities, which include accelerating data center growth, improving CIS margins, focusing on opportunities in alternative powertrains and implementing an organizational structure to support our 80/20 strategy. This will not only provide Modine with higher sustainable growth rates, but will allow us to have a stronger operating model and a brighter future.”

Based on current exchange rates and market outlook, Modine provides the following guidance ranges for fiscal 2022:

Full fiscal year-over-year sales up 12 to 18 percent;
Adjusted EBITDA of $170 million to $185 million.

The guidance ranges include the remaining portion of the Automotive segment, including the liquid-cooled business subject to the pending sale transaction. This business will be included in guidance until the sale has closed.

Conference Call and Webcast

Modine will conduct a conference call and live webcast, with a slide presentation, on Thursday, August 5, 2021 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss its first quarter fiscal 2022 financial results. The webcast and accompanying slides will be available on the Investor Relations section of the Modine website at www.modine.com. Participants are encouraged to log on to the webcast and conference call about ten minutes prior to the start of the event. A replay of the audio and slides will be available on the Investor Relations section of the Modine website at www.modine.com on or after August 5th. A call-in replay will be available through midnight on August 10, 2021 at 800-585-8367, (international replay 416-621-4642); Conference ID# 2684279. The Company will post a transcript of the call on its website on or after August 10, 2021.

About Modine

Modine, with fiscal 2021 revenues of $1.8 billion, specializes in thermal management systems and components, bringing highly engineered heating and cooling components, original equipment products, and systems to diversified global markets through its four complementary segments: BHVAC, CIS, HDE, and Automotive. Modine is a global company headquartered in Racine, Wisconsin (USA), with operations in North America, South America, Europe and Asia. For more information about Modine, visit www.modine.com.

Forwar
d-Looking Statements

This press release contains statements, including information about future financial performance and market conditions, accompanied by phrases such as “believes,” “estimates,” “expects,” “plans,” “anticipates,” “intends,” and other similar “forward-looking” statements, as defined in the Private Securities Litigation Reform Act of 1995. Modine’s actual results, performance or achievements may differ materially from those expressed or implied in these statements because of certain risks and uncertainties, including, but not limited to those described under “Risk Factors” in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended March 31, 2021. Other risks and uncertainties include, but are not limited to, the following: the impact of the COVID-19 pandemic on the national and global economy, our business, suppliers, customers, and employees; the overall health and price-down focus of Modine’s customers; our ability to successfully execute our strategic and operational plans, including our ability to successfully complete the pending sale of our liquid-cooled automotive business, including the receipt of governmental and third-party approvals and the risk that the sale will not close because of a failure to satisfy one or more of the closing conditions (including governmental and third-party approvals) on a timely basis or at all, and our ability to successfully exit our other automotive businesses; our ability to effectively and efficiently modify our cost structure in response to sales volume increases or decreases and complete restructuring activities and realize benefits thereon; our ability to comply with the financial covenants in our credit agreements and to fund our global liquidity requirements efficiently; operational inefficiencies as a result of program launches, unexpected volume increases, product transfers, and delays or inefficiencies resulting from restrictions imposed in response to the COVID-19 pandemic; economic, social and political conditions, changes and challenges in the markets where Modine operates and competes, including foreign currency exchange rate fluctuations, tariffs (and potential trade war impacts resulting from tariffs or retaliatory actions), inflation, changes in interest rates or tightening of the credit markets, recession, restrictions associated with importing and exporting and foreign ownership, public health crises, supplier constraints and the general uncertainties about the impact of regulatory and/or policy changes, including those related to tax and trade, the COVID-19 pandemic and other matters, that have been or may be implemented in the U.S. or abroad, and continuing uncertainty regarding the impacts of “Brexit”; the impact on Modine of any significant increases in commodity prices, particularly aluminum, copper, steel and stainless steel (nickel) and other purchased components and related costs, and our ability to adjust product pricing in response to any such increases; the nature of and Modine’s significant exposure to the vehicular industry and the dependence of this industry on the health of the economy; Modine’s ability to recruit and maintain talent in managerial, leadership, operational and administrative functions; Modine’s ability to protect its proprietary information and intellectual property from theft or attack; the impact of any substantial disruption or material breach of our information technology systems; costs and other effects of environmental investigation, remediation or litigation; and other risks and uncertainties identified by the Company in public filings with the U.S. Securities and Exchange Commission. Forward-looking statements are as of the date of this release, and the Company does not assume any obligation to update any forward-looking statements.

Non-GAAP Financial Disclosures

Adjusted EBITDA, adjusted earnings per share, net debt, and free cash flow (which are defined below) as used in this press release are not measures that are defined in generally accepted accounting principles (GAAP). These non-GAAP measures are used by management as performance measures to evaluate the Company’s overall financial performance and liquidity. The Company believes these measures provide a more consistent view of performance than the closest GAAP equivalent for management and investors. Management compensates for this by using these measures in combination with the GAAP measures. However, these measures are not, and should not be viewed, as substitutes for the applicable GAAP measures, and may be different from similarly-titled measures used by other companies.

Definition – Adjusted EBITDA

Net earnings excluding interest expense, the provision or benefit for income taxes, depreciation and amortization expenses, other income and expense, restructuring expenses, impairment charges, costs associated with the review of strategic alternatives for the Automotive segment’s business operations, and certain other gains or charges. The Company believes that adjusted EBITDA provides a relevant measure of profitability and earnings power. The Company views this financial metric as being useful to assess operating performance from period to period by excluding certain items that it believes are not representative of its core business. Adjusted EBITDA, when calculated for the business segments, is defined as GAAP operating income excluding depreciation and amortization expenses, restructuring expenses, impairment charges, and certain other gains or charges.

Definition – Adjusted earnings per share

Diluted earnings per share plus restructuring expenses, impairment charges, costs associated with the review of strategic alternatives for the Automotive segment’s business operations, and excluding changes in income tax valuation allowances and certain other gains or charges. Adjusted earnings per share is an overall performance measure, not including non-cash impairment charges, costs associated with restructuring activities and certain other gains or charges.

Definition – Net debt

The sum of debt due within one year and long-term debt, less cash and cash equivalents. This is an indicator of the Company’s debt position after considering on-hand cash balances.

Definition – Free cash flow

Free cash flow represents net cash provided by operating activities less expenditures for property, plant and equipment. This measure presents cash generated from operations during the period that is available for strategic capital decisions.

Forward-looking non-GAAP financial measure

The Company’s fiscal 2022 guidance includes Adjusted EBITDA, as defined above, which is a non-GAAP financial measure. The full-year fiscal 2022 guidance for Adjusted EBITDA is based upon the Company’s estimates for interest expense of approximately $14 to $15 million, a provision for income taxes of approximately $16 to $20 million, and depreciation and amortization expense of approximately $55 to $60 million. Adjusted EBITDA also excludes certain cash and non-cash expenses or gains. These expenses and gains may be significant and include items such as restructuring expenses (including severance costs and plant consolidation and relocation expenses), costs associated with the review of strategic alternatives for the automotive business, impairment charges and certain other items. These expenses and gains for the first three months of fiscal 2022 are presented on page 9. Estimates of these expenses and gains for the remainder of fiscal 2022 are not available due to the low visibility and unpredictability of these items.

Modine Manufacturing Company
Consolidated statements of operations (unaudited)
(In millions, except per share amounts)

	Three months ended June 30,
	2021	2020
Net sales	$ 494.6	$ 347.8
Cost of sales	421.4	301.7
Gross profit	73.2	46.1
Selling, general & administrative expenses	59.4	44.7
Restructuring expenses	0.3	4.6
Impairment charges (reversals) – net	(1.8)	–
Loss on sale of assets	6.6	–
Operating income (loss)	8.7	(3.2)
Interest expense	(4.2)	(5.4)
Other income – net	0.2	–
Earnings (loss) before income taxes	4.7	(8.6)
(Provision) benefit for income taxes	(1.9)	0.2
Net earnings (loss)	2.8	(8.4)
Net earnings attributable to noncontrolling interest	(0.5)	(0.2)
Net earnings (loss) attributable to Modine	$ 2.3	$ (8.6)


Net earnings (loss) per share attributable to Modine shareholders – diluted	$ 0.04	$ (0.17)

Weighted-average shares outstanding – diluted	52.5	50.9



Condensed consolidated balance sheets (unaudited)
(In millions)
	June 30, 2021	March 31, 2021
Assets
Cash and cash equivalents	$ 49.0	$ 37.8
Trade receivables	293.7	267.9
Inventories	229.1	195.6
Assets held for sale	76.1	107.6
Other current assets	43.1	35.9
Total current assets	691.0	644.8
Property, plant and equipment – net	271.6	269.9
Intangible assets – net	99.0	100.6
Goodwill	171.4	170.7
Deferred income taxes	28.1	24.5
Other noncurrent assets	65.8	66.2
Total assets	$ 1,326.9	$ 1,276.7

Liabilities and shareholders’ equity
Debt due within one year	$ 22.5	$ 23.3
Accounts payable	260.0	233.9
Liabilities held for sale	62.5	103.3
Other current liabilities	123.0	108.7
Total current liabilities	468.0	469.2
Long-term debt	348.6	311.2
Other noncurrent liabilities	143.1	140.2
Total liabilities	959.7	920.6
Total equity	367.2	356.1
Total liabilities & equity	$ 1,326.9	$ 1,276.7


Modine Manufacturing Company
Condensed consolidated statements of cash flows (unaudited)
(In millions)

	Three months ended June 30,
	2021	2020
Cash flows from operating activities:
Net earnings (loss)	$ 2.8	$ (8.4)
Adjustments to reconcile net earnings (loss) to net cash (used for) provided by
operating activities:
Depreciation and amortization	13.5	18.6
Impairment charges (reversals) – net	(1.8)	–
Loss on sale of assets	6.6	–
Stock-based compensation expense	1.2	0.7
Deferred income taxes	(3.1)	(5.9)
Other – net	0.9	1.3
Changes in operating assets and liabilities:
Trade accounts receivable	(4.9)	21.7
Inventories	(26.7)	(1.5)
Accounts payable	9.2	(34.1)
Other assets and liabilities	(7.8)	19.9
Net cash (used for) provided by operating activities	(10.1)	12.3

Cash flows from investing activities:
Expenditures for property, plant and equipment	(11.4)	(9.1)
Proceeds from (payments for) disposition of assets	(5.7)	0.6
Other – net	1.6	–
Net cash used for investing activities	(15.5)	(8.5)

Cash flows from financing activities:
Net increase in debt	40.7	3.4
Other – net	(1.3)	(1.6)
Net cash provided by financing activities	39.4	1.8

Effect of exchange rate changes on cash	0.4	0.6

Net increase in cash, cash equivalents, restricted cash and cash held for sale	14.2	6.2

Cash, cash equivalents, restricted cash and cash held for sale – beginning of period	46.1	71.3

Cash, cash equivalents, restricted cash and cash held for sale – end of period	$ 60.3	$ 77.5

Modine Manufacturing Company
Segment operating results (unaudited)
(In millions)

	Three months ended June 30,
	2021	2020
Net sales:
Building HVAC Systems	$ 59.9	$ 47.6
Commercial and Industrial Solutions	159.2	122.5
Heavy Duty Equipment	201.8	123.5
Automotive	86.2	62.1
Segment total	507.1	355.7
Corporate and eliminations	(12.5)	(7.9)
Net sales	$494.6	$ 347.8


	Three months ended June 30,
	2021		2020
Gross profit:	$’s	% of sales	$’s	% of sales
Building HVAC Systems	$16.2	27.1%	$14.5	30.5%
Commercial and Industrial Solutions	20.8	13.0%	15.5	12.6%
Heavy Duty Equipment	22.6	11.2%	11.3	9.2%
Automotive	13.2	15.3%	4.8	7.7%
Segment total	72.8	14.3%	46.1	13.0%
Corporate and eliminations	0.4	–	–	–
Gross profit	$73.2	14.8%	$46.1	13.3%


	Three months ended June 30,
	2021	2020
Operating income:
Building HVAC Systems	$ 6.8	$ 7.1
Commercial and Industrial Solutions	6.4	–
Heavy Duty Equipment	8.9	(2.5)
Automotive	4.2	(3.8)
Segment total	26.3	0.8
Corporate and eliminations	(17.6)	(4.0)
Operating income (loss)	$ 8.7	$(3.2)

Modine Manufacturing Company
Adjusted financial results (unaudited)
(In millions, except per share amounts)

	Three months ended June 30,
	2021	2020
Net earnings (loss)	$ 2.8	$ (8.4)
Interest expense	4.2	5.4
Provision (benefit) for income taxes	1.9	(0.2)
Depreciation and amortization expense	13.5	18.6
Other income – net	(0.2)	–
Restructuring expenses ^(a)	0.3	4.6
Impairment charges (reversals) – net ^(b)	(1.8)	–
Loss on sale of assets ^(c)	6.6	–
Automotive separation and exit strategy costs^(d)	1.9	0.5
Strategic reorganization costs ^(e)	0.6	–
Environmental charges ^(f)	3.5	–
Adjusted EBITDA	$33.3	$ 20.5

Net earnings (loss) per share attributable to Modine shareholders – diluted	$0.04	$(0.17)
Restructuring expenses ^(a)	–	0.07
Loss on sale of assets ^(c)	0.13	–
Automotive separation and exit strategy costs^(d)	0.04	0.01
Strategic reorganization costs ^(e)	0.01	–
Environmental charges ^(f)	0.07	–
Tax valuation allowance ^(g)	(0.09)	–
Adjusted earnings per share	$0.20	$(0.09)

^(a) Restructuring expenses primarily consist of employee severance expenses related to targeted headcount reductions and plant consolidation activities. The tax benefit related to restructuring expenses during the first quarter of fiscal 2022 and fiscal 2021 was $0 and $0.8 million, respectively.
^(b) The net impairment reversal in the first quarter of fiscal 2022 primarily relates to the Company’s liquid-cooled automotive business within the Automotive segment. The Company and the buyer modified the transaction perimeter and are currently in the process of amending the sale agreement. Certain manufacturing operations will no longer convey as part of the pending sale. Accordingly, the Company evaluated the long-lived assets of these businesses and reversed $7.4 million of previously-recorded impairment charges to adjust the asset groups to estimated fair value. This impairment reversal was partially offset by $5.6 million of impairment charges recorded during the first quarter of fiscal 2022 related to other assets held for sale. The tax charge related to the net impairment reversal was $1.8 million.
^(c) The Company’s sale of its air-cooled automotive business closed on April 30, 2021. As a result of the sale, the Company recorded a $6.6 million loss on sale at Corporate during the first quarter of fiscal 2022. There was no tax impact associated with this transaction.
^(d) Automotive separation and exit strategy costs consist of costs directly associated with the Company’s review of strategic alternatives for the liquid-cooled and air-cooled automotive businesses, including costs to separate and prepare the underlying businesses for sale. With the exception of $0.1 million and $0.2 million of costs in the first quarter of fiscal 2022 and fiscal 2021, respectively, associated with program and equipment transfers recorded as costs of sales, these costs were recorded as SG&A expenses at Corporate and primarily related to accounting, legal, and IT professional services. The tax benefit related to these costs during the first quarter of fiscal 2022 and fiscal 2021 was $0 and $0.1 million, respectively.
^(e)Strategic reorganization costs, recorded as SG&A expenses at Corporate, primarily relate to professional services for the recruiting of new senior management positions and the Company’s implementation of its 80/20 strategy. The Company is in the process of recruiting general managers as part of its redesigned organizational structure, which better aligns its businesses with key end markets.
^(f)Environmental charges, including related legal costs, are recorded as SG&A expenses at Corporate and relate to a previously-owned U.S. manufacturing facility.
^(g) As of June 30, 2021, the Company reversed a valuation allowance on its deferred tax assets in Italy and, as a result, recorded an income tax benefit of $4.8 million.

Modine Manufacturing Company
Segment adjusted financial results (unaudited)
(In millions)

	Three months ended June 30, 2021						Three months ended June 30, 2020
	Building HVAC Systems	Commercial and Industrial Solutions	Heavy Duty Equipment	Automotive	Corporate and eliminations	Total	Building HVAC Systems	Commercial and Industrial Solutions	Heavy Duty Equipment	Automotive	Corporate and eliminations	Total
Operating income (loss)	$ 6.8	$ 6.4	$ 8.9	$ 4.2	$ (17.6)	$ 8.7	$ 7.1	$ –	$ (2.5)	$ (3.8)	$ (4.0)	$ (3.2)
Depreciation and amortization expense	0.9	5.9	6.3	0.1	0.3	13.5	0.8	6.2	6.1	5.0	0.5	18.6
Restructuring expenses ^(a)	–	–	0.2	0.1	–	0.3	–	2.4	1.9	0.2	0.1	4.6
Impairment charges (reversals) – net ^(a)	–	0.3	–	(2.1)	–	(1.8)	–	–	–	–	–	–
Loss on sale of assets ^(a)	–	–	–	–	6.6	6.6	–	–	–	–	–	–
Automotive separation and exit strategy costs ^(a)	–	–	–	–	1.9	1.9	–	–	–	–	0.5	0.5
Strategic reorganization costs ^(a)	–	–	–	–	0.6	0.6	–	–	–	–	–	–
Environmental charges ^(a)	–	–	–	–	3.5	3.5	–	–	–	–	–	–
Adjusted EBITDA	$ 7.7	$ 12.6	$ 15.4	$ 2.3	$ (4.7)	$ 33.3	$ 7.9	$ 8.6	$ 5.5	$ 1.4	$ (2.9)	$ 20.5



^(a)See the Adjusted EBITDA reconciliation on the previous page for information on restructuring expenses and other adjustments.

Net debt (unaudited)
(In millions)

	June 30, 2021	March 31, 2021
Debt due within one year	$ 22.5	$ 23.3
Long-term debt	348.6	311.2
Total debt	371.1	334.5

Less: cash and cash equivalents	49.0	37.8
Net debt	$ 322.1	$ 296.7



Free cash flow (unaudited)
(In millions)

	Three months ended June 30,
	2021	2020
Net cash (used for) provided by operating activities	$ (10.1)	$ 12.3
Expenditures for property, plant and equipment	(11.4)	(9.1)
Free cash flow	$ (21.5)	$ 3.2

Kathleen Powers

(262) 636-1687
[email protected]

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SOURCE Modine Manufacturing Company

August 4, 2021 4:20 pm

Alamo Group Announces 2021 Second Quarter Results

PR Newswire

SEGUIN, Texas, Aug. 4, 2021 /PRNewswire/ — Alamo Group Inc. (NYSE: ALG) today reported results for the second quarter ended June 30, 2021.

Highlights for the Quarter

Second quarter sales and net income are up significantly over the COVID-impacted prior year second quarter:

Total company net sales of $347.6 million, up 29%
Industrial Division net sales of $231.2 million, up 27%
Agricultural Division net sales of $116.3 million, up 35%
Net income of $26.0 million up 100%, or $2.19 per diluted share, up 99%
Adjusted net income of $23.4 million, or $1.97 per diluted share, up 73% ⁽¹⁾

Trailing twelve-month Adjusted EBITDA of $155.3 million, up 7% from full year 2020⁽¹⁾
Total debt outstanding reduced by $38.7 million during the second quarter, down 28% from the prior year second quarter
Backlog increased 11% during the second quarter to $503.6 million, up 132% over the prior year second quarter

Summary of Results

Alamo Group’s net sales for the second quarter of 2021 were $347.6 million compared to net sales of $268.6 million in the second quarter of 2020, an increase of 29%. Net income for the quarter was $26.0 million, or $2.19 per diluted share, compared to $13.0 million, or $1.10 per diluted share, in the previous year’s second quarter, an increase of 100% in net income and 99% in net income per diluted share.

For the first six months of 2021 net sales were $658.7 million compared to $583.1 million in the previous year’s first six-month period, an increase of 13%. Net income for the first half of 2021 was $43.5 million, or $3.66 per diluted share, versus $28.5 million, or $2.41 per diluted share, for the same period in 2020, an increase of 53% in net income and 52% in net income per diluted share.

The results for the second quarter and first six months of 2021 included a $2.6 million after tax gain on the sale of a facility in the Netherlands while comparable 2020 results included the negative effects of non-cash inventory step up charges of approximately $0.7 million in the second quarter of 2020 and approximately $2.7 million in the first six months of 2020 related to the Morbark acquisition. Excluding the effects of these non-recurring items, second quarter 2021 adjusted net income was $23.4 million, compared to $13.5 million in the prior year second quarter, an increase of 73%.⁽¹⁾

Alamo Group’s results for the second quarter and first six months of 2021 reflect a strong recovery in customer demand compared to prior year periods when the COVID-19 pandemic materially impacted the Company’s performance. While the Company has delivered significant year-over-year sales and profitability improvements, percentage margins have not yet rebounded to pre-pandemic levels. Operationally, the favorable leveraging effects of higher customer demand have been constrained by supply chain disruptions and labor shortages, and have been more than offset by a very high rate of input cost inflation which has exceeded the speed at which the Company has been able to effectively implement offsetting pricing actions.

Results by Division

Net sales for Alamo Group’s Industrial Division in the second quarter of 2021 were $231.2 million, compared to $182.3 million in the prior year, an increase of 27%. The Division’s income from operations for the quarter was $19.9 million compared to $13.9 million in the second quarter of 2020, an increase of 43%. For the first six months of 2021, the Industrial Division’s net sales were $443.1 million versus $412.2 million in the first six months of 2020, an increase of 8%. The Division’s income from operations for the first six months of 2021 was $36.0 million versus $32.2 million in the same period of the prior year, an increase of 12%.

The Industrial Division’s current year results benefited from customer demand growth but were constrained by the supply chain disruptions and the unfavorable price-cost changes previously mentioned. Prior year results were materially impacted by the COVID-19 pandemic and included the negative effects of the Morbark non-cash inventory step up charges mentioned above.

The Company’s Agricultural Division net sales in the second quarter of 2021 were $116.3 million compared to $86.4 million in the prior year’s second quarter, an increase of 35%. The Division’s income from operations for the quarter was $13.7 million compared to $8.8 million in 2020, an increase of 56%. For the first six months of 2021, the Agricultural Division’s net sales were $215.6 million versus $170.9 million in the prior year, an increase of 26%. The Division’s income from operations for the first six months of 2021 was $23.0 million compared to $14.3 million in the prior year, an increase of 61%.

The Agricultural Division continues to enjoy high customer demand aided by low dealer inventories, but it was also affected by supply chain disruptions and input cost increases, which have yet to be fully offset by its pricing actions. However, prior year results in this Division were less affected by the pandemic as compared to the Company’s Industrial Division.

Comments on Results

Jeff Leonard, Alamo Group’s President and Chief Executive Officer, commented, “We are very pleased with our second quarter results in the context of the opportunities, and the challenges, that were evident in our markets during the second quarter. As the global economy continued to recover from the effects of the coronavirus pandemic, demand for our products gained further momentum in both of our operating divisions, across North America and Europe. As a result, the Company achieved record order bookings for a second quarter and backlog also set a new record. Sales in the quarter improved strongly, and net income doubled compared to the second quarter of 2020. Sales and net income were also significantly improved versus the pre-pandemic second quarter of 2019 and benefited from the contributions of the Dutch Power and Morbark businesses that we acquired in 2019.

“Our Agricultural Division produced excellent sales and net income this quarter. Demand for its products was strong not only in North America and Europe, but also in markets such as Brazil and Australia where we have been steadily developing our presence over the past several years. The Division benefited from robust demand for its mowers and agricultural implements from farm and ranch customers and also achieved modestly higher sales of spare parts compared to the second quarter of 2020.

“Our Industrial Division also produced solid second quarter results as state and municipal governmental budgets recovered somewhat faster than had previously been expected. While governmental sales were much stronger than the comparable period in 2020, they have not yet fully recovered to pre-pandemic levels in most of this Division’s product lines including vacuum trucks, sweepers and snow removal equipment. Non-governmental markets for the Division’s products also improved, most notably in our Morbark business which serves the forestry and tree care markets. The Industrial Division’s results also benefited from an improvement in sales of spare parts compared to the second quarter of 2020.

“While the healthy level of activity in our markets was certainly gratifying, we also faced several significant cost and supply headwinds during the quarter that partly offset the expected benefits of higher sales volume. Input costs for raw materials and certain industrial components continued to rise at a pace that was higher than anticipated and the pricing actions we’ve taken will take time to catch up and be fully evident in our results. We also continued to experience supply chain disruptions and shipping delays that adversely impacted operational efficiency. Shortages of skilled labor also hindered our ability to ramp up capacity to meet higher demand in several of our larger operations. To address this issue, we are accelerating our deployment of industrial robots to mitigate skilled labor shortages, especially in welding, and we are pleased with the positive results we are seeing from this initiative.

“In spite of these significant challenges and disruptions, the Company produced solid second quarter results. I’m very proud of the way our employees have reacted, quickly taking actions to minimize the negative impact of the headwinds we experienced during the quarter. Our teams achieved healthy sales growth accompanied by a modest expansion of gross margin relative to the prior year second quarter. Our gross margins are now only slightly off from the levels we achieved in the second quarter of 2019, before the onset of the pandemic, and the Company is once again approaching double-digit operating income as a percentage of sales despite the recent cost pressures. I’m also pleased that we were able to further reduce our long-term debt during the quarter.

“Looking forward, the potential of a significant recurrence of coronavirus illness in our communities certainly remains an ongoing concern. Assuming the pandemic does not worsen again, we believe customer buying activity will remain at a good level in both the Agricultural and Industrial segments through at least the remainder of 2021. Supported by our backlog of almost $504 million, Alamo Group’s outlook for the next several quarters remains quite positive. However, at the moment, it is difficult to predict when the headwinds we experienced during the second quarter will abate. Our expectation is that they will persist at least through the balance of 2021 and some issues, such as the ongoing shortage of computer chips, which can impact our truck chassis and tractor deliveries, are now expected to persist into early 2022. We will continue to take appropriate price actions to address changes in our cost structure, and will continue to work closely with our suppliers to work through the ongoing supply chain disruptions. Most importantly, we continue to invest in our people, processes and equipment to expand our capability to deliver the backlog as efficiently as possible. So, while the second quarter was certainly a challenging one, I am pleased with the solid financial and operating results we have achieved and I remain optimistic that the Company will continue to perform well for the remainder of the year. “

Earnings Conference Call

Alamo Group will host a conference call to discuss the results on Thursday, August 5, 2021 at 3:00 p.m. ET. Hosting the call will be members of senior management.

Individuals wishing to participate in the conference call should dial 866-248-8441 (domestic) or 323-289-6576 (international). For interested individuals unable to join the call, a replay will be available until Thursday, August 12, 2021 by dialing 888-203-1112 (domestic) or 719-457-0820 (internationally), passcode 5523668.

The live broadcast of Alamo Group Inc.’s quarterly conference call will be available online at the Company’s website, www.alamo-group.com (under “Investor Relations/Events & Presentations”) on Thursday, August 5, 2021, beginning at 3:00 p.m. ET. The online replay will follow shortly after the call ends and will be archived on the Company’s website for 60 days.

About Alamo Group

Alamo Group is a leader in the design, manufacture, distribution and service of high quality equipment for infrastructure maintenance, agriculture and other applications. Our products include truck and tractor mounted mowing and other vegetation maintenance equipment, street sweepers, snow removal equipment, excavators, vacuum trucks, other industrial equipment, agricultural implements, forestry equipment and related after-market parts and services. The Company, founded in 1969, has approximately 4,070 employees and operates 27 plants in North America, Europe, Australia and Brazil as of June 30, 2021. The corporate offices of Alamo Group Inc. are located in Seguin, Texas.

Forward Looking Statements

This release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company’s actual results in future periods to differ materially from forecasted results. Among those factors which could cause actual results to differ materially are the following: overall market demand, continuing impacts from the COVID-19 pandemic including more significant supply chain disruptions, reductions in customer demand, sales and profitability declines, operational disruptions, full or partial facility closures, and other similar impacts, inflation, competition, weather, seasonality, currency-related issues, and other risk factors listed from time to time in the Company’s SEC reports.

The Company does not undertake any obligation to update the information contained herein, which speaks only as of this date.

(Tables Follow)

^{(1) This is a non-GAAP financial measure or other information relating to our GAAP financial measures that we have provided to investors in order to allow greater transparency and a deeper understanding of our financial condition and operating results. For a reconciliation of the non-GAAP financial measure or for a more detailed explanation of financial results, refer to “Non-GAAP Financial Measure Reconciliation” below and the Attachments thereto.}

Alamo Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)

	June 30, 2021			June 30, 2020
ASSETS
Current assets:
Cash and cash equivalents		$	85,630		$	82,002
Accounts receivable, net		253,179			229,714
Inventories		264,540			248,706
Other current assets		19,171			11,691
Total current assets		622,520			572,113

Rental equipment, net		38,619			48,583

Property, plant and equipment		149,380			156,210

Goodwill		194,936			195,457
Intangible assets		185,581			198,925
Other non-current assets		17,790			18,400

Total assets		$	1,208,826		$	1,189,688

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable		$	104,715		$	63,417
Income taxes payable		2,724			2,619
Accrued liabilities		62,107			52,615
Current maturities of long-term debt and finance lease obligations		15,069			15,072
Total current liabilities		184,615			133,723

Long-term debt, net of current maturities		299,910			423,723
Long-term tax liability		4,408			6,778
Deferred pension liability		1,219			1,464
Other long-term liabilities		26,921			25,361
Deferred income taxes		19,872			21,488

Total stockholders’ equity		671,881			577,151

Total liabilities and stockholders’ equity		$	1,208,826		$	1,189,688

Alamo Group Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)

	Three Months Ended						Six Months Ended
	6/30/2021			6/30/2020			6/30/2021			6/30/2020
Net sales:
Industrial	$	231,207		$	182,257		$	443,118		$	412,232
Agricultural	116,343			86,378			215,621			170,851
Total net sales	347,550			268,635			658,739			583,083

Cost of sales	259,410			200,810			494,173			436,318
Gross margin	88,140			67,825			164,566			146,765
	25.4		%	25.2		%	25.0		%	25.2		%

Selling, general and administration expense	50,887			41,551			98,217			92,799
Amortization expense	3,663			3,613			7,321			7,449
Income from operations	33,590			22,661			59,028			46,517
	9.7		%	8.4		%	9.0		%	8.0		%

Interest expense	(2,854)			(3,941)			(5,467)			(9,460)
Interest income	293			306			581			662
Other income (expense)	3,253			(1,288)			2,623			1,053

Income before income taxes	34,282			17,738			56,765			38,772
Provision for income taxes	8,245			4,749			13,266			10,255

Net Income	$	26,037		$	12,989		$	43,499		$	28,517

Net income per common share:

Basic	$	2.20		$	1.10		$	3.68		$	2.42

Diluted	$	2.19		$	1.10		$	3.66		$	2.41

Average common shares:
Basic	11,842			11,778			11,831			11,769

Diluted	11,902			11,842			11,892			11,835

Alamo Group Inc.

Non-GAAP Financial Measures Reconciliation

From time to time, Alamo Group Inc. may disclose certain “non-GAAP financial measures” in the course of its earnings releases, earnings conference calls, financial presentations and otherwise. For these purposes, “GAAP” refers to generally accepted accounting principles in the United States. The Securities and Exchange Commission (SEC) defines a “non-GAAP financial measure” as a numerical measure of historical or future financial performance, financial position, or cash flows that is subject to adjustments that effectively exclude or include amounts from the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures disclosed by Alamo Group are provided as additional information to investors in order to provide them with greater transparency about, or an alternative method for assessing, our financial condition and operating results. These measures are not in accordance with, or a substitute for, GAAP and may be different from, or inconsistent with, non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, we will also generally present the most directly comparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable GAAP financial measure.

Attachment 1 discloses Adjusted Operating Income, Adjusted Net Income and Adjusted Diluted EPS, related to the impact of non-recurring items, of which are non-GAAP financial measures. Attachment 2 discloses a non-GAAP financial presentation related to the impact of currency translation on net sales by division. Attachment 3 shows the net change in our total debt net of cash and earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA excluding the impact of the step-up inventory charge at Morbark, all of which are non-GAAP financial measures. The Company considers this information useful to investors to allow better comparability of period-to-period operating performance.

Attachment 1

Alamo Group Inc.
Non-GAAP Financial Reconciliation
(in thousands, except per share numbers)
(Unaudited)

Impact of Non-recurring Items

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020

Operating Income – GAAP	$	33,590	$	22,661	$	59,028	$	46,517
(add: acquisition inventory step-up charge)	—		711		—		2,662
Adjusted Operating Income – non-GAAP	$	33,590	$	23,372	$	59,028	$	49,179

Net Income – GAAP	$	26,037	$	12,989	$	43,499	$	28,517
(add: acquisition inventory step-up charge)	—		523		—		1,958
(less: gain on sale of property)	(2,635)		—		(2,635)		—
Adjusted Net Income – non-GAAP	$	23,402	$	13,512	$	40,864	$	30,475

Diluted EPS – GAAP	$	2.19	$	1.10	$	3.66	$	2.41
(add: acquisition inventory step-up charge)	—		0.04		—		0.17
(less: gain on sale of property)	(0.22)		—		(0.22)		—
Adjusted Diluted EPS – non-GAAP	$	1.97	$	1.14	$	3.44	$	2.58

Attachment 2

Alamo Group Inc.
Non-GAAP Financial Reconciliation
(in thousands)
(Unaudited)

Impact of Currency Translation on Net Sales by Division

	Three Months Ended June 30,						Change due to currency translation
	2021		2020		% change from 2020		$		%

Industrial	$	231,207	$	182,257	26.9	%	$	3,949	2.2	%
Agricultural	116,343		86,378		34.7	%	5,172		6.0	%
Total net sales	$	347,550	$	268,635	29.4	%	$	9,121	3.4	%



	Six Months Ended June 30,						Change due to currency translation
	2021		2020		% change from 2020		$		%

Industrial	$	443,118	$	412,232	7.5	%	$	7,017	1.7	%
Agricultural	215,621		170,851		26.2	%	6,517		3.8	%
Total net sales	$	658,739	$	583,083	13.0	%	$	13,534	2.3	%

Attachment 3

Alamo Group Inc.
Non-GAAP Financial Reconciliation
(in thousands)
(Unaudited)

Consolidated Net Change of Total Debt, Net of Cash
	June 30, 2021		June 30, 2020		Net Change

Current maturities	$	15,069	$	15,072
Long-term debt,net of current	299,910		423,723
Total debt	$	314,979	$	438,795

Total cash	85,630		82,002
Total Debt Net of Cash	$	229,349	$	356,793	$	(127,444)

EBITDA
	Six Months Ended				Trailing Twelve Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		December 31, 2020

Income from operations	$	59,028	$	46,517	$	105,676	$	93,165
Depreciation	14,964		14,565		29,493		29,094
Amortization	7,655		7,783		15,252		15,380
EBITDA	$	81,647	$	68,865	$	150,421	$	137,639

Adjusted EBITDA
	Six Months Ended				Trailing Twelve Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		December 31, 2020

Income from operations	$	59,028	$	46,517	$	105,676	$	93,165
adjust: acquisition inventory step-up charge	—		2,662		2,168		4,830
adjust: redundancy costs	—		—		2,730		2,730
Adjusted Income from operations	$	59,028	$	49,179	$	110,574	$	100,725
Depreciation	14,964		14,565		29,493		29,094
Amortization	7,655		7,783		15,252		15,380
Adjusted EBITDA	$	81,647	$	71,527	$	155,319	$	145,199

View original content:https://www.prnewswire.com/news-releases/alamo-group-announces-2021-second-quarter-results-301348691.html

SOURCE Alamo Group Inc.

August 4, 2021 4:20 pm

Miller Industries Reports 2021 Second Quarter Results

PR Newswire

CHATTANOOGA, Tenn., Aug. 4, 2021 /PRNewswire/ — Miller Industries, Inc. (NYSE: MLR) (the “Company”) today announced financial results for the second quarter ended June 30, 2021.

For the second quarter of 2021, net sales were $181.2 million, an increase of 40.9%, compared to $128.5 million for the second quarter of 2020. Net income in the second quarter of 2021 was $6.5 million, or $0.57 per share, an increase of 11.8%, compared to net income of $5.8 million, or $0.51 per share, in the prior year period.

Gross profit for the second quarter of 2021 was $20.6 million, or 11.4% of net sales, compared to $17.7 million, or 13.8% of net sales, for the second quarter of 2020. Selling, general and administrative expenses were $12.0 million, or 6.6% of net sales, compared to $10.1 million, or 7.8% of net sales, in the prior year period.

For the six months ended June 30, 2021, net sales were $351.1 million, an increase of 15.3% compared to $304.6 million in the prior year period. The Company reported net income of $9.7 million, or $0.85 per share for the six months of 2021, a decrease of 13.9% compared to net income of $11.3 million, or $0.99 per share for the first six months of 2020.

The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.18 per share, payable September 13, 2021 to shareholders of record at the close of business on September 3, 2021, the forty-third consecutive quarter that the Company has paid a dividend.

Jeffrey I. Badgley, Co-Chief Executive Officer of the Company said, “We are encouraged by our strong performance in the second quarter as our operations continued to normalize towards pre-pandemic levels. For the second quarter, sales increased 40.9% to $181.2 million as demand trends continued to improve across all of our markets. In addition, our operations are beginning to see the benefits of our enterprise software upgrades completed in the first quarter and we do not anticipate any significant disruptions to our business operations as we work to implement further system improvements across our network. Despite favorable demand conditions and improving industry dynamics, our operations continue to be impacted by supply chain disruptions and limited availability of freight transportation across our network, as well as increased employee turnover and difficulties in hiring new workers. While we anticipate these headwinds to continue, we are leveraging all available resources to ensure we can meet customer demand.”

Mr. Badgley continued, “With industry dynamics such as vehicle miles traveled continuing to improve, we are encouraged by the favorable demand backdrop as evidenced by our healthy order rates and strong backlog. Despite the challenges faced in our domestic export shipping operations, customer demand in our international business is strong. As we move into the second half of the year, the industry backdrop continues to improve and we are well positioned to capitalize on all growth opportunities. Lastly, our financial position and strong cash generation grant us the financial flexibility to drive the business forward and deliver for our customers.”

In conjunction with this release, the Company will host a conference call, which will be simultaneously broadcast live over the Internet. Management will host the call, which is scheduled for tomorrow, August 5, 2021, at 10:00 AM ET. Listeners can access the conference call live and archived over the Internet through a link at:

https://www.webcaster4.com/Webcast/Page/1034/42388

Please allow 15 minutes prior to the call to visit the site, download, and install any necessary audio software. A replay of this call will be available approximately one hour after the live call ends through August 12, 2021. The replay number is 1-844-512-2921, Passcode 5677126.

Miller Industries is The World’s Largest Manufacturer of Towing and Recovery Equipment®, and markets its towing and recovery equipment under a number of well-recognized brands, including Century®, Vulcan®, Chevron™, Holmes®, Challenger®, Champion®, Jige™, Boniface™, Titan® and Eagle®.

Certain statements in this news release may be deemed to be forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as “may,” “will,” “should,” “could,” “continue,” “future,” “potential,” “believe,” “project,” “plan,” “intend,” “seek,” “estimate,” “predict,” “expect,” “anticipate” and similar expressions, or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements. Such forward-looking statements are made based on our management’s beliefs as well as assumptions made by, and information currently available to, our management. Our actual results may differ materially from the results anticipated in these forward-looking statements due to, among other things: the overall impact of the COVID-19 pandemic on the Company’s revenues, results of operations and financial condition; the duration and severity of the COVID-19 pandemic, including actions that may be taken by government authorities and others to address or otherwise mitigate the impact of the COVID-19 pandemic; the cyclical nature of our industry and changes in consumer confidence; economic and market conditions, including the negative impacts of the COVID-19 pandemic on global economies and the Company’s customers, suppliers and employees; our dependence upon outside suppliers for our raw materials, including aluminum, steel, petroleum-related products and other purchased component parts, as well as truck chassis; our recent supply chain challenges and our ability to manage our inventory and our workforce to adapt to the increased complexity in our supply chain; changes in price and availability (including as a result of the increased demand due to improving economic conditions, the impact of the COVID-19 pandemic and the imposition of additional tariffs) of aluminum, steel, petroleum-related products and other purchased component parts, as well as truck chassis; delays in receiving supplies of such materials or parts, including as a result of the impact of the COVID-19 pandemic; our customers’ access to capital and credit to fund purchases; operational challenges caused by increased sales volumes in recent years, prior to the COVID-19 pandemic; various political, economic and other uncertainties relating to our international operations, including restrictive taxation and foreign currency fluctuation; special risks from our sales to U.S. and other governmental entities through prime contractors; our ability to secure new government orders; changes in fuel and other transportation costs, insurance costs and weather conditions; changes in government regulations; failure to comply with domestic and foreign anti-corruption laws; competition in our industry and our ability to attract or retain customers; our ability to develop or acquire proprietary products and technology; assertions against us relating to intellectual property rights; problems hiring or retaining skilled labor; a disruption in, or breach in security of, our information technology systems or any violation of data protection laws; changes in the tax regimes and related government policies and regulations in the countries in which we operate; the effects of regulations relating to conflict minerals; the catastrophic loss of one of our manufacturing facilities; environmental and health and safety liabilities and requirements; loss of the services of our key executives; product warranty or product liability claims in excess of our insurance coverage; potential recalls of components or parts manufactured for us by suppliers or potential recalls of defective products; an inability to acquire insurance at commercially reasonable rates; and those other risks referenced herein, and those risks discussed in our filings with the Securities and Exchange Commission, including those risks discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, as supplemented in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021, which discussion is incorporated herein by this reference. Such factors are not exclusive. We do not undertake to update any forward-looking statement that may be made from time to time by, or on behalf of, the Company.

Miller Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data) (Unaudited)

Three Months Ended

Six Months Ended

June 30

2021

2020

Change

2021

2020

Change

NET SALES

181,158

128,529

40.9%

351,070

304,583

15.3%

COSTS OF OPERATIONS

160,568

110,802

44.9%

314,649

268,318

17.3%

GROSS PROFIT

20,590

17,727

16.2%

36,421

36,265

0.4%

OPERATING EXPENSES:

Selling, General and Administrative Expenses

12,019

10,067

19.4%

23,070

21,041

9.6%

NON-OPERATING (INCOME) EXPENSES:

Interest Expense, Net

340

429

(20.7)%

615

788

(22.0)%

Other (Income) Expense, Net

(48)

(275)

(82.5)%

228

(184)

(223.9)%

Total Expense, Net

12,311

10,221

20.4%

23,913

21,645

10.5%

INCOME BEFORE INCOME TAXES

8,279

7,506

10.3%

12,508

14,620

(14.4)%

INCOME TAX PROVISION

1,763

1,680

4.9%

2,814

3,363

(16.3)%

NET INCOME

6,516

5,826

11.8%

9,694

11,257

(13.9)%

BASIC INCOME PER COMMON SHARE

0.57

0.51

11.8%

0.85

0.99

(14.1)%

CASH DIVIDENDS DECLARED PER COMMON SHARE

0.18

0.18

0.0%

0.36

0.36

0.0%

WEIGHTED AVERAGE SHARES OUTSTANDING:

Basic

11,411

11,405

0.1%

11,411

11,405

0.1%

Miller Industries, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except per share data)

	June 30,
	2021		December 31,
	(Unaudited)		2020
ASSETS
CURRENT ASSETS:
Cash and temporary investments	$	53,934	$	57,521
Accounts receivable, net of allowance for doubtful accounts of $1,369 and $1,295 at June 30, 2021 and December 31, 2020, respectively		161,778		141,642
Inventories, net		91,996		83,939
Prepaid expenses		7,453		3,167
Total current assets		315,161		286,269
NONCURRENT ASSETS:
Property, plant and equipment, net		98,820		98,620
Right-of-use assets – operating leases		1,359		1,468
Goodwill		11,619		11,619
Other assets		520		434
TOTAL ASSETS	$	427,479	$	398,410

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	108,078	$	85,534
Accrued liabilities		24,177		24,773
Current portion of operating lease obligation		367		354
Current portion of finance lease obligation		22		21
Total current liabilities		132,644		110,682
NONCURRENT LIABILITIES:
Noncurrent portion of operating lease obligation		992		1,116
Noncurrent portion of finance lease obligation		4		15
Deferred income tax liabilities		4,261		4,144
Total liabilities		137,901		115,957

SHAREHOLDERS’ EQUITY:
Preferred stock, $0.01 par value; 5,000,000 shares authorized, none issued or outstanding		—		—
Common stock, $0.01 par value; 100,000,000 shares authorized, 11,410,728 and 11,405,468, outstanding at June 30, 2021 and December 31, 2020, respectively		114		114
Additional paid-in capital		151,449		151,249
Accumulated surplus		139,465		133,879
Accumulated other comprehensive loss		(1,450)		(2,789)
Total shareholders’ equity		289,578		282,453
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	427,479	$	398,410

View original content:https://www.prnewswire.com/news-releases/miller-industries-reports-2021-second-quarter-results-301348650.html

SOURCE Miller Industries, Inc.

August 4, 2021 4:20 pm

Hennessy Advisors, Inc. Reports 25% Increase in Quarterly Earnings Per Share and Announces Quarterly Dividend

PR Newswire

NOVATO, Calif., Aug. 4, 2021 /PRNewswire/ — Hennessy Advisors, Inc. (NASDAQ:HNNA) reported results for its third fiscal quarter of 2021, which ended June 30, 2021. The firm also announced a quarterly dividend of $0.1375 per share to be paid on September 2, 2021, to shareholders of record as of August 17, 2021, which represents an annualized dividend yield of 5.9%.*

“Through constant and often conflicting and confusing media reports on the Delta variant, inflation, employment, interest rates, and politics, we continue to see the financial markets rise to new highs, which I believe is driven primarily by strong underlying fundamentals,” said Neil Hennessy, Chairman and CEO. “There are so many positives, including the return of outdoor events and increasing occupancy rates in hotels. As hard as it is to say, it is even encouraging to see the return of traffic after the quiet summer of 2020,” he noted.

“The Dow Jones Industrial Average closed at a record high on July 26, 2021, the economy grew at a strong annual rate of 6.5% during the second calendar quarter, and excess cash held by both consumers and companies appears ready to be deployed. I see room for continued dividend hikes and stock buybacks, which should support continued strength in the markets. In my opinion, headwinds caused by short-term supply chain issues and labor shortages should be offset by wage increases and improved production output, allowing the U.S. economy to thrive,” said Mr. Hennessy.

“We are very pleased to report growth in assets under management, income, and earnings this quarter, which I believe is a testament to the determination and hard work of our team,” said Teresa Nilsen, President and COO. “We maintain a healthy balance sheet and are happy to share our prosperity with our shareholders via our quarterly dividend. We continue to pursue opportunities to build Hennessy Advisors for future success, through both organic growth and strategic partnerships,” she added.

Summary Highlights (compared to the prior comparable quarter ended June 30, 2020):

Total revenue of $8.5 million, an increase of 24%.
Net income of $2.2 million, an increase of 26%.
Fully diluted earnings per share of $0.30, an increase of 25%.
Average assets under management, upon which revenue is earned, of $4.2 billion, an increase of 20%.
Total assets under management of $4.1 billion, an increase of 18%.
Cash and cash equivalents of $14.0 million, an increase of 61%.

	Three Months Ended June 30,		Change
	2021	2020	Dollar	Percent
Total Revenue	$ 8,527,229	$ 6,895,494	$ 1,631,735	23.7%
Net Income	2,244,115	1,775,235	468,880	26.4%
Earnings Per Share (Diluted)	0.30	0.24	0.06	25.0%
Weighted Average Number of Shares Outstanding (Diluted)	7,431,925	7,279,294	152,631	2.1%
Mutual Fund Average Assets
Under Management	4,151,414,945	3,448,808,949	702,605,996	20.4%

	As of June 30,
	2021	2020
Mutual Fund Total Assets
Under Management	$ 4,117,560,103	$ 3,491,767,647	$ 625,792,456	17.9%
Cash and Cash Equivalents	14,037,646	8,708,094	5,329,552	61.2%


* Based on the closing stock price of $9.33 on August 3, 2021, and an annualized dividend of $0.55 per share.

About Hennessy Advisors, Inc.

Hennessy Advisors, Inc. is a publicly traded investment manager offering a broad range of domestic equity, multi-asset, and sector and specialty mutual funds. Hennessy Advisors, Inc. is committed to providing superior service to shareholders and employing a consistent and disciplined approach to investing based on a buy–and–hold philosophy that rejects the idea of market timing.

Supplemental Information

Nothing in this press release shall be considered a solicitation to buy or an offer to sell a security to any person in any jurisdiction where such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction.

Forward-Looking Statements

This press release contains “forward-looking statements” for which Hennessy Advisors, Inc. claims the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995. Forward–looking statements relate to expectations and projections about future events based on currently available information. Forward–looking statements are not a guarantee of future performance or results and are not necessarily accurate indications of the times at which, or means by which, such performance or results may be achieved. Forward–looking statements are subject to risks, uncertainties, and assumptions, including those described in the sections entitled “Risk Factors” and elsewhere in the reports that Hennessy Advisors, Inc. files with the Securities and Exchange Commission. Unforeseen developments could cause actual performance or results to differ substantially from those expressed in, or suggested by, the forward–looking statements. Hennessy Advisors, Inc. management does not assume responsibility for the accuracy or completeness of the forward-looking statements and undertakes no responsibility to update any such statement after the date of this press release to conform to actual results or to changes in expectations.

View original content:https://www.prnewswire.com/news-releases/hennessy-advisors-inc-reports-25-increase-in-quarterly-earnings-per-share-and-announces-quarterly-dividend-301347943.html

SOURCE Hennessy Advisors, Inc.

August 4, 2021 4:20 pm

MGM Resorts International Reports Second Quarter 2021 Financial And Operating Results

– Historical record Adjusted Property EBITDAR margins across Las Vegas Strip and Regional Operations

– Historical record Regional Operations Adjusted Property EBITDAR

– Recent announcements to monetize the Company’s MGP Operating Partnership units and the underlying real estate of CityCenter and MGM Springfield further bolster the Company’s liquidity position and simplify its corporate structure

PR Newswire

LAS VEGAS, Aug. 4, 2021 /PRNewswire/ — MGM Resorts International (NYSE: MGM) (“MGM Resorts” or the “Company”) today reported financial results for the quarter ended June 30, 2021.

“We delivered a strong second quarter, driven by robust demand and productivity efforts across our domestic portfolio. Our Las Vegas Strip and Regional Operations Adjusted Property EBITDAR margins reached all-time records and our Regional Operations also delivered an all-time quarterly record in Adjusted Property EBITDAR. Our U.S. sports betting and iGaming venture, BetMGM, continues to outperform as the number two operator nationwide,” said Bill Hornbuckle, Chief Executive Officer and President of MGM Resorts International. “We also recently announced several strategic transactions that furthered our goal of becoming a more streamlined, focused organization with stronger liquidity. We continued to advance that goal today with our announced agreement with VICI and MGM Growth Properties to monetize our MGP Operating Partnership units for $4.4 billion in cash. I’m grateful for the tremendous work that our MGM Resorts teams continue to put into positioning this Company for future growth and success.”

“Our robust liquidity position provides us with significant flexibility as our business continues to improve and stabilize. As such, we have returned capital to shareholders through share repurchases during the second quarter and expect to remain programmatic in our approach through the rest of the year,” said Jonathan Halkyard, Chief Financial Officer and Treasurer of MGM Resorts. “As we navigate future uses of our capital, we will remain disciplined in maintaining a strong balance sheet, pursuing targeted growth opportunities and returning cash to shareholders.”

Second Quarter 2021 Financial Highlights:

Consolidated Results

Consolidated net revenues of $2.3 billion, an increase of 683% compared to the prior year quarter. While the current quarter benefited from the easing of operational and capacity restrictions and an increase in travel, the prior year quarter was negatively affected by temporary closures at our properties due to the COVID-19 pandemic;
Consolidated operating income was $264 million compared to consolidated operating loss of $1.0 billion in the prior year quarter;
Net income attributable to MGM Resorts of $105 million compared to net loss attributable to MGM Resorts of $857 million in the prior year quarter;
Diluted earnings per share of $0.14 in the current quarter compared to diluted loss per share of $1.67 in the prior year quarter;
Adjusted diluted earnings per share (“Adjusted EPS”)⁽¹⁾ was a loss per share of $0.13 in the current quarter compared to an Adjusted EPS loss per share of $1.52 in the prior year quarter; and
Consolidated Adjusted EBITDAR⁽²⁾ of $617 million in the current quarter.

Financial Position

& Liquidity

Cash and cash equivalents balance as of June 30, 2021 was $5.6 billion, which included $298 million at the MGP Operating Partnership and $331 million at MGM China;
Total liquidity at June 30, 2021 was $9.9 billion, which included $1.6 billion at the MGP Operating Partnership and $1.8 billion at MGM China, which was comprised of cash and cash equivalents and capacity under the revolving credit facilities at the Company, MGP Operating Partnership and MGM China; and
At June 30, 2021, principal amount of indebtedness was $12.7 billion, including $4.2 billion at the MGP Operating Partnership and $3.0 billion at MGM China.

Las Vegas Strip Resorts

Net revenues of $1.0 billion, an increase of 566% compared to the prior year quarter and a decrease of 31% compared to the second quarter of 2019. While the current quarter benefited from the easing of operational and capacity restrictions and an increase in travel, the prior year quarter was negatively affected by temporary property closures;
Table Games Hold Adjusted Las Vegas Strip Resorts Net Revenues⁽³⁾ of $1 billion, an increase of 613% compared to the prior year quarter and a decrease of 32% compared to the second quarter of 2019;
Adjusted Property EBITDAR⁽²⁾of $397 million compared to a loss of $104 million in the prior year quarter, and a decrease of 5% compared to the second quarter of 2019;
Adjusted Property EBITDAR margin⁽²⁾of 39.5% in the current quarter, an increase of 1,097 basis points compared to the second quarter of 2019 due primarily to realized benefits of the Company’s cost savings initiatives; and
Table Games Hold Adjusted Las Vegas Strip Resorts Adjusted Property EBITDAR⁽²⁾ of $403 million compared to a loss of $112 million in the prior year quarter, and a decrease of 6% compared to the second quarter of 2019.

Regional Operations

Net revenues of $856 million, an increase of 859% compared to the prior year quarter and a decrease of 6% compared to the second quarter of 2019. While the current quarter benefited from the easing of operational and capacity restrictions and an increase in travel, the prior year quarter was negatively affected by temporary property closures;
Adjusted Property EBITDAR of $318 million compared to a loss of $112 million in the prior year quarter, and an increase of 22% compared to the second quarter of 2019; and
Adjusted Property EBITDAR margin of 37% in the current quarter, an increase of 855 basis points compared to the second quarter of 2019 due primarily to realized benefits of the Company’s costs savings initiatives.

MGM China

Net revenues of $311 million, an increase of 836% compared to the prior year quarter and a decrease of 56% compared to the second quarter of 2019. The prior year quarter was more significantly impacted by travel and entry restrictions in Macau as well as other operational restrictions related to the pandemic than in the current quarter;
VIP Table Games Hold Adjusted MGM China Net Revenues⁽³⁾of $317 million, an increase of 895% compared to the prior year quarter and a decrease of 57% compared to the second quarter of 2019;
Adjusted Property EBITDAR of $9 million compared to a loss of $116 million in the prior year quarter, and a decrease of 95% compared to the second quarter of 2019; and
VIP Table Games Hold Adjusted MGM China Adjusted Property EBITDAR⁽²⁾ of $13 million compared to a loss of $118 million in the prior year quarter, and a decrease of 93% compared to the second quarter of 2019.

Recent Developments

In August 2021, the Company entered into an agreement with VICI Properties, Inc. (“VICI”) and MGP whereby VICI will acquire MGP. Pursuant to the agreement, MGP Class A shareholders will receive 1.366x shares of newly issued VICI stock in exchange for each Class A share of MGP. The fixed exchange ratio represents an agreed upon price of $43 per share of MGP Class A share to the five-day volume weighted average price of VICI stock as of the close of business on July 30, 2021. A majority of the Company’s Operating Partnership units will be redeemed for $43 per unit, for cash consideration of approximately $4.4 billion, and the Company will retain an approximate $370 million ownership interest in the VICI operating partnership. As part of the transaction, the Company will enter into an amended and restated master lease with VICI. The new master lease will have an initial term of 25 years, with three ten-year renewals, and initial annual rent of $860 million, escalating at a rate of 2.0% per annum for the first 10 years and thereafter at the greater of 2.0% per annum or the consumer price index, subject to a 3.0% cap. The other terms are largely consistent with the existing master lease. The transaction is expected to close in the first half of 2022, subject to regulatory approvals and approval by VICI stockholders.

In June 2021, the Company entered into an agreement pursuant to which the Company will purchase the 50% ownership interest in CityCenter held by Infinity World Development Corp for cash consideration of $2.125 billion. The transaction is expected to close in the third quarter of 2021, subject to certain closing conditions. Upon close of the transaction, the Company will own 100% of CityCenter and, accordingly, will consolidate CityCenter in its financial statements. The Company also entered into an agreement pursuant to which a fund managed by Blackstone Group Inc. will acquire the real estate assets of Aria and Vdara from the Company for cash consideration of $3.89 billion and lease it back to a subsidiary of the Company pursuant to a lease agreement. The Aria and Vdara lease will have an initial term of 30 years and initial annual base cash rent of $215 million. The transaction is expected to close in the third quarter of 2021, subject to certain closing conditions, which include the requisite closing of the equity interest purchase of CityCenter, discussed above.

In May 2021, the Company entered into an agreement with MGP whereby MGP will acquire the real estate assets of MGM Springfield from the Company for $400 million of cash consideration. MGM Springfield will be added to the master lease between the Company and MGP. Following the closing of the transaction, the annual rent payment to MGP will increase by $30 million. The transaction is expected to close in the fourth quarter of 2021, upon receipt of interim regulatory approvals from the Massachusetts Gaming Commission and the satisfaction of other customary closing conditions.

Adjusted Diluted Earnings Per Share

The following table reconciles diluted earnings (loss) per share (“EPS”) to Adjusted EPS (approximate EPS impact shown, per share; positive adjustments represent charges to income):

Three Months Ended June 30,	2021		2020
Diluted earnings (loss) per share	$	0.14	$	(1.67)
Property transactions, net		(0.06)		0.05
October 1 litigation settlement		—		0.10
Restructuring		—		0.04
Non-operating items:
Gain related to equity instrument		(0.17)		—
Change in fair value of MGP swaps		0.01		—
Unconsolidated affiliate items:
Gain related to sale of Harmon land		(0.10)		—
Income tax impact on net income adjustments (1)		0.05		(0.04)
Adjusted diluted loss per share	$	(0.13)	$	(1.52)

(1)	The income tax impact includes current and deferred income tax expense based upon the nature of the adjustment and the jurisdiction in which it occurs.

Las Vegas Strip Resorts

Casino revenue was $353 million for the second quarter of 2021 compared to $63 million in the prior year quarter, an increase of 461%, due primarily to the impact of COVID-19 in the prior year period.

The following table shows key gaming statistics for Las Vegas Strip Resorts:

Three Months Ended June 30,	2021		2020
	*(Dollars in millions)*
Table Games Drop	$	777	$	149
Table Games Win	$	173	$	48
Table Games Win %	22.3%		32.5%
Slots Handle	$	3,641	$	524
Slots Win	$	351	$	49
Slots Win %	9.6%		9.3%

Rooms revenue was $299 million for the second quarter of 2021 compared to $26 million in the prior year quarter, an increase of 1,044% due primarily to an increase in REVPAR⁽⁴⁾as a result of increased occupancy at our properties due to the easing of capacity restrictions and increased travel in the current quarter.

The following table shows key hotel statistics for Las Vegas Strip Resorts:

Three Months Ended June 30,	2021		2020
Occupancy %⁽¹⁾	77%		43%
Average Daily Rate (ADR)	$	149	$	154
Revenue per Available Room (REVPAR)⁽¹⁾	$	115	$	66

(1)	Rooms that were out of service during the three months ended June 30, 2020 due to the COVID-19 pandemic were excluded from the available room count when calculating hotel occupancy and REVPAR.

Regional Operations

Casino revenue was $708 million compared to $77 million in the prior year quarter, an increase of 817% due primarily to the impact of COVID-19 in the prior year period.

The following table shows key gaming statistics for Regional Operations:

Three Months Ended June 30,	2021		2020
	*(Dollars in millions)*
Table Games Drop	$	972	$	58
Table Games Win	$	203	$	13
Table Games Win %	20.9%		21.9%
Slots Handle	$	6,514	$	485
Slots Win	$	622	$	48
Slots Win %	9.6%		10.0%

MGM China

Key second quarter results for MGM China include:

Net revenues of $311 million, an increase of 836% compared to the prior year quarter and a decrease of 56% compared to the second quarter of 2019;
Main floor table games win of $252 million compared to $12 million, an increase of 2,093% compared to the prior year quarter;
VIP table games win of $71 million compared to $12 million, an increase of 505% compared to the prior year quarter; and
Adjusted Property EBITDAR of $9 million compared to a loss of $116 million in the prior year quarter. License fee expense was $5 million in the current quarter and $1 million in the prior year quarter.

The following table shows key gaming statistics for MGM China:

Three Months Ended June 30,	2021		2020
	*(Dollars in millions)*
VIP Table Games Turnover	$	2,590	$	450
VIP Table Games Win	$	71	$	12
VIP Table Games Win %	2.7%		2.6%
Main Floor Table Games Drop	$	1,258	$	66
Main floor Table Games Win	$	252	$	12
Main Floor Table Games Win %	20.1%		17.5%

Corporate Expense

Corporate expense, including share-based compensation for corporate employees, decreased to $97 million in the second quarter of 2021, from $143 million in the prior year quarter. The current quarter included $6 million in transaction costs, while the prior year quarter included $49 million in October 1 litigation settlement expense, $5 million in restructuring costs, and $9 million in corporate initiative costs.

Unconsolidated Affiliates

The following table summarizes information related to the Company’s share of operating income (loss) from unconsolidated affiliates:

Three Months Ended June 30,	2021		2020
	*(In thousands)*
CityCenter	$	90,212	$	(39,113)
MGP BREIT Venture		38,954		38,861
BetMGM		(45,979)		(5,241)
Other		151		(2,860)
	$	83,338	$	(8,353)

On June 8, 2021, CityCenter Holdings, LLC (“CityCenter”) closed the sale of its Harmon land for $80 million on which it recorded a $30 million gain. MGM Resorts recorded a $50 million gain, which included $15 million representing its 50% share of the gain recorded by CityCenter and $35 million representing the reversal of certain basis differences.

For the three months ended June 30, 2021, CityCenter’s net income was $79 million and Adjusted EBITDA⁽⁵⁾ was $120 million compared to net loss of $112 million and Adjusted EBITDA loss of $37 million in the prior year quarter. While the current quarter benefited from the easing of operational and capacity restrictions and an increase in travel, the prior year quarter was negatively affected by temporary property closures.

MGM Growth Properties

During the second quarter of 2021, the Company made rent payments to MGM Growth Properties Operating Partnership LP (“MGP Operating Partnership”) in the amount of $211 million and received distributions of $55 million from the MGP Operating Partnership. In June 2021, the Board of Directors of MGM Growth Properties LLC (“MGP”) approved a quarterly dividend of $0.5150 per Class A share which represents a dividend of $2.06 per share on an annualized basis totaling $81 million, which was paid on July 15, 2021 to holders of record on June 30, 2021. The Company concurrently received a $57 million distribution attributable to its ownership of MGP Operating Partnership units.

MGM Resorts Dividend and Share Repurchases

On August 4, 2021, the Company’s Board of Directors approved a quarterly dividend of $0.0025 per share. The dividend will be payable on September 15, 2021 to holders of record on September 10, 2021.

During the second quarter of 2021, the Company repurchased approximately 5.6 million shares of its common stock at an average price of $39.48 per share for an aggregate amount of $220 million, pursuant to the February 2020$3.0 billion stock repurchase plan. The remaining availability under the February 2020$3.0 billion stock repurchase program was $2.7 billion as of June 30, 2021. All shares repurchased under the Company’s program have been retired.

Conference Call Details

MGM Resorts will host a conference call at 5:00 p.m. Eastern Time today, which will include a brief discussion of the results followed by a question and answer session. In addition, supplemental slides will be posted prior to the start of the call on MGM’s Investor Relations website at http://investors.mgmresorts.com.

The call will be accessible via the Internet through https://investors.mgmresorts.com/investors/events-and-presentations/ or by calling 1-888-317-6003 for domestic callers and 1-412-317-6061 for international callers. The conference call access code is 9674546.

A replay of the call will be available through August 11, 2021. The replay may be accessed by dialing 1-877-344-7529 or 1-412-317-0088. The replay access code is 10157792. The call will be archived at https://investors.mgmresorts.com.

1. “Adjusted EPS” is diluted earnings or loss per share adjusted to exclude preopening and start-up expenses, property transactions, net, gain on REIT transactions, net, October 1 litigation settlement, restructuring costs (which represents costs related to severance, accelerated stock compensation expense, and consulting fees directly related to the operating model component of the MGM 2020 plan), gain related to equity instrument, foreign currency gain or loss related to MGM China’s U.S. dollar-denominated debt, mark-to-market adjustments related to MGP’s unhedged interest rate swaps, gain related to CityCenter’s sale of Harmon land recorded within income from unconsolidated affiliates, and mark-to-market adjustments related to CityCenter’s unhedged interest rate swaps recorded within non-operating items from unconsolidated affiliates.

Adjusted EPS is a non-GAAP measure and is presented solely as a supplemental disclosure to reported GAAP measures because management believes this measure is useful in providing period-to-period comparisons of the results of the Company’s continuing operations to assist investors in reviewing the Company’s operating performance over time. Management believes that while certain items excluded from Adjusted EPS may be recurring in nature and should not be disregarded in evaluating the Company’s earnings performance, it is useful to exclude such items when comparing current performance to prior periods because these items can vary significantly depending on specific underlying transactions or events. Also, management believes certain excluded items, such as restructuring costs and items further discussed in footnote 2 below, may not relate specifically to current operating trends or be indicative of future results. Adjusted EPS should not be construed as an alternative to GAAP earnings per share as an indicator of the Company’s performance. In addition, Adjusted EPS may not be defined in the same manner by all companies and, as a result, may not be comparable to similarly titled non-GAAP financial measures of other companies. A reconciliation of Adjusted EPS to diluted earnings per share can be found under “Adjusted Diluted Earnings Per Share” included in this release.

2. “Adjusted EBITDAR” is earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, gain on REIT transactions, net, CEO transition expense, October 1 litigation settlement, restructuring costs (which represents costs related to severance, accelerated stock compensation expense, and consulting fees directly related to the operating model component of the MGM 2020 plan), gain related to CityCenter’s sale of Harmon land recorded within income from unconsolidated affiliates, rent expense associated with triple net operating and ground leases, income from unconsolidated affiliates related to investments in real estate ventures, and property transactions, net.

“Adjusted Property EBITDAR” is the Company’s reportable segment GAAP measure, which management utilizes as the primary profit measure for its reportable segments and underlying operating segments. Adjusted Property EBITDAR is a measure defined as earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, gain on REIT transactions, net, restructuring costs (which represents costs related to severance, accelerated stock compensation expense, and consulting fees directly related to the operating model component of the MGM 2020 plan), rent expense associated with triple net operating and ground leases, income from unconsolidated affiliates related to investments in real estate ventures, property transactions, net, and also excludes corporate expense and stock compensation expense, which are not allocated to each operating segment, and rent expense related to the master lease with MGM Growth Properties that eliminates in consolidation. The Company manages capital allocation, tax planning, stock compensation, and financing decisions at the corporate level. “Adjusted Property EBITDAR margin” is Adjusted Property EBITDAR divided by related segment net revenues.

“Table Games Hold Adjusted Las Vegas Strip Resorts Adjusted Property EBITDAR” and “VIP Table Games Hold Adjusted MGM China Adjusted Property EBITDAR” are supplemental non-GAAP financial measures, that, in addition to the reasons described above for the presentation of Adjusted Property EBITDAR, are presented to adjust for the impact of certain variances in table games and VIP table games’ win percentages compared to the mid-point of the expected ranges. Table Games Hold Adjusted Las Vegas Strip Resorts Adjusted Property EBITDAR is calculated by applying a win percentage of 30.0% for Baccarat and 21.0% for non-Baccarat games to the respective table games drops for the quarter, which represents the mid-point of the expected ranges of 25.0% to 35.0% for Baccarat and 19.0% to 23.0% for non-Baccarat at the Las Vegas Strip Resorts properties. VIP Table Games Hold Adjusted MGM China Adjusted Property EBITDAR is based on applying a VIP Rolling Chip win percentage of 2.95% to the VIP Rolling Chip volume, which represents the mid-point of the expected normal range of 2.6% to 3.3% for MGM China. Table Games Hold Adjusted Las Vegas Strip Resorts Adjusted Property EBITDAR and VIP Table Games Hold Adjusted MGM China Adjusted Property EBITDAR are also adjusted for the gaming taxes, VIP commissions, bad debt expense, discounts and other incentives that would have been incurred or avoided when applying the win percentages noted above to the respective gaming volumes.

Adjusted EBITDAR information is a valuation metric, should not be used as an operating metric, and is presented solely as a supplemental disclosure to reported GAAP measures because management believes this measure is widely used by analysts, lenders, financial institutions, and investors as a principal basis for the valuation of gaming companies. Management believes that while items excluded from Adjusted EBITDAR may be recurring in nature and should not be disregarded in evaluation of the Company’s earnings performance, it is useful to exclude such items when analyzing current results and trends. Also, management believes excluded items may not relate specifically to current trends or be indicative of future results. For example, preopening and start-up expenses will be significantly different in periods when the Company is developing and constructing a major expansion project and will depend on where the current period lies within the development cycle, as well as the size and scope of the project(s). Property transactions, net includes normal recurring disposals, gains and losses on sales of assets related to specific assets within the Company’s resorts, but also includes gains or losses on sales of an entire operating resort or a group of resorts and impairment charges on entire asset groups or investments in unconsolidated affiliates, which may not be comparable period over period. In addition, management excludes rent expense associated with triple net operating leases and ground leases. Management believes excluding rent expense associated with triple net operating leases and ground leases provides useful information to analysts, lenders, financial institutions, and investors when valuing the Company, as well as comparing the Company’s results to other gaming companies, without regard to differences in capital structure and leasing arrangements since the operations of other gaming companies may or may not include triple net operating leases or ground leases. However, as discussed herein, Adjusted EBITDAR should not be viewed as a measure of overall operating performance, considered in isolation, or as an alternative to net income, because this measure is not presented on a GAAP basis and excludes certain expenses, including the rent expense associated with the Company’s triple net operating and ground leases, and are provided for the limited purposes discussed herein.

Adjusted EBITDAR, Table Games Hold Adjusted Las Vegas Strip Resorts Adjusted Property EBITDAR and VIP Table Games Hold Adjusted MGM China Adjusted Property EBITDAR should not be construed as alternatives to operating income or net income, as indicators of the Company’s performance; or as alternatives to cash flows from operating activities, as measures of liquidity; or as any other measure determined in accordance with generally accepted accounting principles. The Company has significant uses of cash flows, including capital expenditures, interest payments, taxes, real estate triple net lease and ground lease payments, and debt principal repayments, which are not reflected in Adjusted EBITDAR, Table Games Hold Adjusted Las Vegas Strip Resorts Adjusted Property EBITDAR, or VIP Table Games Hold Adjusted MGM China Adjusted Property EBITDAR. Also, other companies in the gaming and hospitality industries that report Adjusted EBITDAR, Table Games Hold Adjusted Las Vegas Strip Resorts Adjusted Property EBITDAR, or VIP Table Games Hold Adjusted MGM China Adjusted Property EBITDAR information may calculate Adjusted EBITDAR, Table Games Hold Adjusted Las Vegas Strip Resorts Adjusted Property EBITDAR, or VIP Table Games Hold Adjusted MGM China Adjusted Property EBITDAR in a different manner and such differences may be material.

A reconciliation of GAAP net income (loss) to Adjusted EBITDAR is included in the financial schedules in this release.

3. “Table Games Hold Adjusted Las Vegas Strip Resorts Net Revenues” and “VIP Table Games Hold Adjusted MGM China Net Revenues” are additional supplemental non-GAAP financial measures that are presented to adjust Las Vegas Strip Resorts net revenues and MGM China net revenues for the impact of certain variances in table games and VIP table games’ win percentages compared to the mid-point of the expected ranges, as described in footnote 2 above. Table Games Hold Adjusted Las Vegas Strip Resorts Net Revenues and VIP Table Games Hold Adjusted MGM China Net Revenues are also adjusted for the VIP commissions, discounts and other incentives that would have been incurred or avoided when applying the win percentages noted in footnote 2 above to the respective gaming volumes. Management believes Table Games Hold Adjusted Las Vegas Strip Resorts Net Revenues and VIP Table Games Hold Adjusted MGM China Net Revenues present consistent measures in providing period-to-period comparisons and are useful measures in assisting investors evaluating the Company’s operating performance. Table Games Hold Adjusted Las Vegas Strip Resorts Net Revenues and VIP Table Games Hold Adjusted MGM China Net Revenues should not be construed as alternatives to GAAP net revenues, as indicators of the Company’s performance, or as any other measure determined in accordance with generally accepted accounting principles. Reconciliations of GAAP net revenues to Table Games Hold Adjusted Las Vegas Strip Resorts Net Revenues and VIP Table Games Hold Adjusted MGM China Net Revenues are included in the financial schedules in this release.

4. REVPAR is hotel revenue per available room.

5. CityCenter non-GAAP Measure

“Adjusted EBITDA” is earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, restructuring costs (which represents costs related to severance, accelerated stock compensation expense, and consulting fees directly related to the operating model component of the MGM 2020 plan) and property transactions, net. Management utilizes Adjusted EBITDA as the primary profit measure for CityCenter. Adjusted EBITDA is a non-GAAP measure and is presented solely as a supplemental disclosure to reported GAAP measures. Management believes that while certain items excluded from Adjusted EBITDA may be recurring in nature and should not be disregarded in evaluating CityCenter’s earnings performance, it is useful to exclude such items when comparing current performance to prior periods because these items can vary significantly depending on specific underlying transactions or events. Also, management believes certain excluded items, such as restructuring costs and items further discussed above, may not relate specifically to current operating trends or be indicative of future results. Adjusted EBITDA should not be construed as alternatives to operating income or net income, as indicators of CityCenter’s performance; or as alternatives to cash flows from operating activities, as a measure of liquidity; or as any other measure determined in accordance with generally accepted accounting principles. A reconciliation of GAAP net income (loss) to Adjusted EBITDA is included in the financial schedules in this release.

About MGM Resorts International

MGM Resorts International (NYSE: MGM) is an S&P 500® global entertainment company with national and international locations featuring best-in-class hotels and casinos, state-of-the-art meetings and conference spaces, incredible live and theatrical entertainment experiences, and an extensive array of restaurant, nightlife and retail offerings. MGM Resorts creates immersive, iconic experiences through its suite of Las Vegas-inspired brands. The MGM Resorts portfolio encompasses 31 unique hotel and gaming destinations globally, including some of the most recognizable resort brands in the industry. The Company’s 50/50 venture, BetMGM, LLC, offers U.S. sports betting and online gaming through market-leading brands, including BetMGM and partypoker. The Company is currently pursuing targeted expansion in Asia through the integrated resort opportunity in Japan.
Through its “Focused on What Matters: Embracing Humanity and Protecting the Planet”

philosophy

, MGM Resorts commits to creating a more sustainable future, while striving to make a bigger difference in the lives of its employees, guests, and in the communities where it operates. The global employees of MGM Resorts are proud of their company for being recognized as one of FORTUNE® Magazine’s World’s Most Admired Companies®. For more information, please visit us at

www.mgmresorts.com

. Please also connect with us @MGMResortsIntl on

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Statements in this release that are not historical facts are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and/or uncertainties, including those described in the Company’s public filings with the Securities and Exchange Commission. The Company has based forward-looking statements on management’s current expectations and assumptions and not on historical facts. Examples of these statements include, but are not limited to, the Company’s expectations regarding the closing of its recently announced transactions and any benefits expected to be received from such transactions, future results, including the continued impact of COVID-19 on its results of operations and the duration of such impact, expectations regarding the benefits to be achieved from the changes to the Company’s operating model (including any projected cost savings), expectations regarding the Company’s liquidity position, the Company’s ability to execute on its strategic plans, including the development of an integrated resort in Japan and positioning BetMGM as a leader in sports betting and iGaming, and the Company’s ability to return capital to shareholders (including the timing and amount of any share repurchases or dividends). These forward-looking statements involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated in such forward-looking statements include the continued impact of the COVID-19 pandemic on the Company’s business, the effects of economic conditions and market conditions in the markets in which the Company operates and competition with other destination travel locations throughout the United States and the world, the design, timing and costs of expansion projects, risks relating to international operations, permits, licenses, financings, approvals and other contingencies in connection with growth in new or existing jurisdictions and additional risks and uncertainties described in the Company’s Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise, except as required by law. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those other forward-looking statements.

MGM RESORTS CONTACTS:

Investment Community
CATHERINE PARK
Executive Director of Investor Relations
(702) 693-8711 or [email protected]

News Media
BRIAN AHERN
Director of Communications
[email protected]

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

2021

2020

2021

2020

Revenues:

Casino

1,336,124

163,649

2,434,757

1,217,675

Rooms

365,028

31,623

563,447

465,574

Food and beverage

302,666

29,771

460,078

426,480

Entertainment, retail and other

189,011

48,569

324,233

318,514

Reimbursed costs

75,133

16,197

133,194

114,383

2,267,962

289,809

3,915,709

2,542,626

Expenses:

Casino

616,903

200,393

1,168,808

829,063

Rooms

137,287

41,251

241,500

213,860

Food and beverage

214,159

60,306

349,386

399,942

Entertainment, retail and other

102,170

56,223

180,551

255,286

Reimbursed costs

75,133

16,197

133,194

114,383

General and administrative

590,209

473,564

1,136,616

1,047,870

Corporate expense

96,870

142,578

174,907

286,386

Preopening and start-up expenses

(82)

Property transactions, net

(28,906)

26,349

(2,835)

81,324

Gain on REIT transactions, net

–

(1,491,945)

Depreciation and amortization

283,625

299,206

574,176

617,496

2,087,540

1,315,985

3,956,398

2,353,705

Income (loss) from unconsolidated affiliates

83,338

(8,353)

57,759

27,395

Operating income (loss)

263,760

(1,034,529)

17,070

216,316

Non-operating income (expense):

Interest expense, net of amounts capitalized

(202,772)

(156,756)

(398,067)

(313,893)

Non-operating items from unconsolidated affiliates

(23,216)

(23,761)

(44,052)

(56,382)

Other, net

87,358

8,321

119,543

(115,943)

(138,630)

(172,196)

(322,576)

(486,218)

Income (loss) before income taxes

125,130

(1,206,725)

(305,506)

(269,902)

Benefit (provision) for income taxes

(34,826)

270,238

59,872

7,934

Net income (loss)

90,304

(936,487)

(245,634)

(261,968)

Less: Net loss attributable to noncontrolling interests

14,449

79,230

18,558

211,580

Net income (loss) attributable to MGM Resorts International

104,753

(857,257)

(227,076)

(50,388)

Earnings (loss) per share:

Basic

0.14

(1.67)

(0.56)

(0.02)

Diluted

0.14

(1.67)

(0.56)

(0.02)

Weighted average common shares outstanding:

Basic

489,459

493,456

491,785

494,434

Diluted

495,302

493,456

491,785

494,434

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)


		June 30,		December 31,
		2021		2020

ASSETS
Current assets:
	Cash and cash equivalents	$	5,626,232	$	5,101,637
	Accounts receivable, net		430,841		316,502
	Inventories		79,019		88,323
	Income tax receivable		226,193		243,415
	Prepaid expenses and other		212,258		200,782
	Total current assets		6,574,543		5,950,659

Property and equipment, net			14,344,684		14,632,091

Other assets:
	Investments in and advances to unconsolidated affiliates		1,484,717		1,447,043
	Goodwill		2,089,212		2,091,278
	Other intangible assets, net		3,545,815		3,643,748
	Operating lease right-of-use assets, net		8,208,972		8,286,694
	Other long-term assets, net		528,435		443,421
	Total other assets		15,857,151		15,912,184
		$	36,776,378	$	36,494,934


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
	Accounts payable	$	210,654	$	142,523
	Construction payable		21,740		30,149
	Accrued interest on long-term debt		161,568		138,832
	Other accrued liabilities		1,642,409		1,545,079
	Total current liabilities		2,036,371		1,856,583

Deferred income taxes, net			2,170,945		2,153,016
Long-term debt, net			12,574,939		12,376,684
Other long-term obligations			375,615		472,084
Operating lease liabilities			8,403,862		8,390,117
Redeemable noncontrolling interest			110,524		66,542
Stockholders’ equity:
	Common stock, $.01 par value: authorized 1,000,000,000 shares,
	issued and outstanding 486,529,984 and 494,317,865 shares		4,865		4,943
	Capital in excess of par value		3,335,015		3,439,453
	Retained earnings		2,861,474		3,091,007
	Accumulated other comprehensive loss		(21,173)		(30,677)
	Total MGM Resorts International stockholders’ equity		6,180,181		6,504,726
	Noncontrolling interests		4,923,941		4,675,182
	Total stockholders’ equity		11,104,122		11,179,908
		$	36,776,378	$	36,494,934

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

SUPPLEMENTAL DATA – NET REVENUES

(In thousands)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

2021

2020

2021

2020

Las Vegas Strip Resorts

1,004,568

150,811

1,549,532

1,284,617

Regional Operations

856,282

89,264

1,567,633

814,924

MGM China

310,631

33,198

606,985

305,085

Management and other operations

96,481

16,536

191,559

138,000

2,267,962

289,809

3,915,709

2,542,626

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

SUPPLEMENTAL DATA – ADJUSTED PROPERTY EBITDAR and ADJUSTED EBITDAR

(In thousands)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

2021

2020

2021

2020

Las Vegas Strip Resorts

396,805

(104,447)

504,924

163,152

Regional Operations

318,348

(112,085)

560,330

39,635

MGM China

8,581

(116,288)

13,356

(138,278)

Unconsolidated affiliates (1)

(8,082)

(49,302)

(75,333)

(37,068)

Management and other operations

1,880

(15,984)

15,466

(22,846)

Stock compensation

(10,509)

(14,735)

(26,538)

(31,666)

Corporate

(90,266)

(79,321)

(157,563)

(169,999)

616,757

834,642

(1) Represents the Company’s share of operating income (loss) excluding investments in real estate ventures, adjusted for the effect of certain basis differences and excluding impact of gain on sale of Harmon land.

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO MGM RESORTS INTERNATIONAL TO ADJUSTED EBITDAR

(In thousands)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

2021

2020

2021

2020

Net income (loss) attributable to MGM Resorts International

104,753

(857,257)

(227,076)

(50,388)

Plus: Net loss attributable to noncontrolling interests

(14,449)

(79,230)

(18,558)

(211,580)

Net income (loss)

90,304

(936,487)

(245,634)

(261,968)

(Benefit) provision for income taxes

34,826

(270,238)

(59,872)

(7,934)

Income (loss) before income taxes

125,130

(1,206,725)

(305,506)

(269,902)

Non-operating (income) expense:

Interest expense, net of amounts capitalized

202,772

156,756

398,067

313,893

Other, net

(64,142)

15,440

(75,491)

172,325

138,630

172,196

322,576

486,218

Operating income (loss)

263,760

(1,034,529)

17,070

216,316

Preopening and start-up expenses

(82)

Property transactions, net

(28,906)

26,349

(2,835)

81,324

Gain on REIT transactions, net

–

(1,491,945)

Depreciation and amortization

283,625

299,206

574,176

617,496

CEO transition expense

–

44,401

October 1 litigation settlement

–

49,000

–

49,000

Restructuring

–

19,882

–

19,882

Triple net operating lease and ground lease rent expense

189,609

189,567

379,229

331,485

Gain related to sale of Harmon land – unconsolidated affiliate

(49,755)

–

(49,755)

–

Income from unconsolidated affiliates related to real estate ventures

(41,666)

(41,555)

(83,338)

(65,069)

Adjusted EBITDAR

616,757

834,642

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

RECONCILIATIONS OF LAS VEGAS STRIP RESORTS NET REVENUES AND LAS VEGAS STRIP RESORTS ADJUSTED PROPERTY EBITDAR TO TABLE GAMES HOLD ADJUSTED

LAS VEGAS STRIP RESORTS NET REVENUES AND TABLE GAMES HOLD ADJUSTED LAS VEGAS STRIP RESORTS ADJUSTED PROPERTY EBITDAR

(In thousands)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

2021

2020

2021

2020

Las Vegas Strip Resorts net revenues

1,004,568

150,811

1,549,532

1,284,617

Hold adjustment (1)

6,985

(9,015)

5,914

(2,289)

Table Games Hold Adjusted Las Vegas Strip Resorts Net Revenues

1,011,553

141,796

1,555,446

1,282,328

Las Vegas Strip Resorts Adjusted Property EBITDAR

396,805

(104,447)

504,924

163,152

Hold adjustment (2)

5,967

(7,722)

5,022

(2,024)

Table Games Hold Adjusted Las Vegas Strip Resorts Adjusted Property EBITDAR

402,772

(112,169)

509,946

161,128

(1) For the Las Vegas Strip Resorts, hold adjustment represents the estimated incremental table games win or loss had the Company’s win percentage equaled the mid-point of the expected normal range of 25.0% to 35.0% for Baccarat and 19.0% to 23.0% for non-Baccarat. Amounts include estimated discounts and other incentives related to increases or decreases in table games win.

(2) These amounts include estimated incremental expenses (gaming taxes and bad debt expense) that would have been incurred or avoided on the incremental table games win or loss calculated in (1) above.

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

RECONCILIATIONS OF MGM CHINA NET REVENUES AND MGM CHINA ADJUSTED PROPERTY EBITDAR TO VIP TABLE GAMES HOLD ADJUSTED MGM CHINA NET REVENUES

AND VIP TABLE GAMES HOLD ADJUSTED MGM CHINA ADJUSTED PROPERTY EBITDAR

(In thousands)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

2021

2020

2021

2020

MGM China net revenues

310,631

33,198

606,985

305,085

Hold adjustment (3)

6,470

(1,341)

3,729

1,561

VIP Table Games Hold Adjusted MGM China Net Revenues

317,101

31,857

610,714

306,646

MGM China Adjusted Property EBITDAR

8,581

(116,288)

13,356

(138,278)

Hold adjustment (4)

4,188

(1,778)

4,480

3,498

VIP Table Games Hold Adjusted MGM China Adjusted Property EBITDAR

12,769

(118,066)

17,836

(134,780)

(3) For MGM China, hold adjustment represents the estimated incremental VIP table games win or loss related to VIP Rolling Chip volume play had the Company’s win percentage equaled the mid-point of the expected normal range of 2.6% to 3.3%. Amounts include estimated commissions and other incentives related to increases or decreases in VIP table games win.

(4) These amounts include estimated incremental expenses (gaming taxes and bad debt expense) that would have been incurred or avoided on the incremental VIP table games win or loss calculated in (3) above.

CITYCENTER HOLDINGS, LLC

SUPPLEMENTAL DATA – NET REVENUES AND ADJUSTED EBITDA

(In thousands)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

2021

2020

2021

2020

Net revenues

259,482

3,185

393,569

268,316

Adjusted EBITDA

119,948

(37,422)

153,193

41,130

CITYCENTER HOLDINGS, LLC

SUPPLEMENTAL DATA – HOTEL STATISTICS

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

2021

2020

2021

2020

Occupancy %

77.9%

N/A

59.6%

86.0%

ADR (1)

$218

N/A

$215

$285

REVPAR (1)

$170

N/A

$128

$245

(1) Rooms that were out of service, including full and midweek closures, during the three and six months ended June 30, 2020 due to the COVID-19 pandemic were excluded from the available room count when calculating hotel occupancy and REVPAR.

CITYCENTER HOLDINGS, LLC

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(In thousands)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

2021

2020

2021

2020

Net income (loss)

78,901

(112,444)

43,505

(133,321)

Non-operating (income) expense:

Interest expense, net of amounts capitalized

19,264

18,534

38,356

39,891

Other, net

(4,223)

(1,487)

(10,753)

22,193

15,041

17,047

27,603

62,084

Operating income (loss)

93,942

(95,397)

71,108

(71,237)

Property transactions, net

(30,213)

(30,057)

(2,478)

Depreciation and amortization

56,219

56,744

112,142

113,634

Restructuring

–

1,211

–

1,211

Adjusted EBITDA

119,948

(37,422)

153,193

41,130

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SOURCE MGM Resorts International